Short Sales - Modesto Real Estate Agent

SHORT SALE FAQ - Questions & Answers

 

Q1- How is a short sale different from a traditional sale?

 

A1- Short sales can take longer because they need to get approval by a third-party, which is the bank or mortgage holder. We use a company that specializes in them, so we can often get these transactions to close much quicker. Otherwise, it's a regular sale with a contract between the buyer and seller. Buyers just need to know that even though a seller may accept an offer, they can't close unless the bank or lender also accepts it.

 

Q2- How is a short sale different from a foreclosure?

 

A2- With foreclosures, there is a process in which the owner is given every opportunity to bring their payments current. At the end of the day, if they are not able to do so, they lose all legal and equitable interest in the property, which is turned over to the bank. With a short sale, the owner is typically 120 to 180 days behind in their payments. They're also upside-down on the property, which means the value of the property is less than what's currently owed. Plus, we have to negotiate with both the seller and lender, who will very often allow the property to be sold for less than the current value since the loss might be less than what they'll face in foreclosure. Sellers can't profit from short sales, which have to be arm's length transactions, meaning the property can't be sold to a family member. There's also been talk in the past about deficiency judgments, but many state legislatures have decided that the seller doesn't have to pay tax on the forgiven amount. Finally, a short sale is not as bad and does not stay on your credit report as long as a foreclosure.

 

Q3- How long are short sales typically taking in today's market?

 

A3- Short sales were taking on average three to four months, with little or no communication during that time. As a result, we were seeing many buyers back out or walk away from sales. In large measure, this was due to the fact that lenders did not have the appropriate systems in place or enough people to handle the volume of transactions. Now, though, the larger lenders have put systems in place and hired additional staff, and we're getting responses in two or three weeks.

 

Q4- What advice do you have for anyone purchasing a short sale?

 

A4- To make sure they're dealing with a company that's educated on short sales, since there are a lot of misperceptions out there. Our agents are always going to seminars to learn more about short sales -- how to deal with the banks or lenders, what guidelines and procedures they have, and more. An educated Realtor who knows the process is very important. Just like doctors have specialties, so do agents. Right now, the bulk of our business is in foreclosures and short sales, which is why our company is so proactive in making sure we stay educated and informed.

 

Q5- What kinds of things can go wrong with these transactions?

 

A5- There are certain guidelines that qualify a property for a short sale; a hardship is usually attached. Just because a seller is upside down [meaning they owe more than the property is worth], the bank or lender may not necessarily view it as a short sale. And, even with properties that have been approved for short sales, banks and lenders can reject offers from buyers. That's where the education of our agents comes into play. We also work closely with a company that specializes in short sales to make sure these kinds of problems don't surface.

 

Q6- How can a Realtor® most help buyers with short sales?

 

A6- The Realtor® can help by negotiating with lenders to determine a fair price for today's market. With home values changing so quickly and so often, it's difficult for the average buyer to keep up with all the changes. There are also companies that help to negotiate short sales, but they charge a fee and are held accountable by other state laws. As Realtors®, we're allowed under California statutes to negotiate short sale transactions as long as we don't charge fees above and beyond our normal commission. Also, when you work with a Realtor®, you have a third party in the mix who is not emotionally charged. In situations like this, you need a cool head to negotiate an equitable settlement, and we definitely provide a valuable service in that respect.

 

After you have had the chance to review this information, contact me so I can tell you more about how I can help to make everything happen for you.

 

I look forward to having a chance to earn your business and provide you with a memorable experience even in a short sale!

 

Call us at (209) 410-9650