Hello. This is the first part in what I hope is a valuable resource for property owners thinking of short selling their house. Just to make sure everyone is up to speed I want to clarify what a short sale is. A Short Sale happens when you are selling or attempting to sell your house for less (short) then what is owed on the property. With home values dropping as much as 60% from the highs of 2005 - 2006 a lot of home owners are facing this situation.
So what should you expect? Or put another way, how does this work? The first and hardest part is finally making that decision to sell your home. Most of us bought our homes with the intention of paying the monthly morgtage and being a good homeowner. But we can't control external factors that may make that very difficult to do. Once you have decided to put the home up for sale you will need to do a couple of things. First, contact your lender and your realtor. Talk to your lender to see if you can qualify for an approved short sale with them or if you can qualify for a HAFA (Home Affordable Foreclosure Alternatives) short sale. With a HAFA short sale:
- You can get free advice from HUD-approved housing counselors and licensed real estate professionals.
- Unlike conventional short sales, a HAFA short sale completely releases you from your mortgage debt after selling the property. This means you will no longer be responsible for the amount that falls "short" of the amount you still owe. The deficiency is guaranteed to be waived by the servicer.
- In a HAFA short sale, your mortgage company works with you to determine an acceptable sale price.
- HAFA has a less negative effect on your credit score than foreclosure or conventional short sales.
- When you close, HAFA may provide $3,000 in relocation assistance.
Next, contact your realtor. A realtor that specializes in distressed property sales can walk you through all of the steps involved to get the short sale started and completed. A good place to start looking for a realtor if you don't have one already is to look for a realtor with the CDPE (Certified Distressed Property Expert) designation. A realtor holding this designation has gone through extensive training and will have valuable experience with short sales.
And..... the first thing your realtor is going to ask you to do is write a Hardship letter. This is a very important part of the process. Without this letter, your lender will not start to consider your request for a short sale. And your expert realtor will want to verfiy the hardship. A hardship could be the loss or decrease of income, divorce, death, relocation, mortgage payment adusting to a level that you cannot afford, etc. One thing a hardship is not is loss in property value.
In my next blog I'll cover what should be in a Hardship Letter.
In the meantime, feel free to contact me wtih any questions about Short Sales.
Gary Wuestenberg is a licensed California Real Estate Broker serving Martinez, Central Contra Costa County and Solano County since 2002. He specializes in helping homeowners negotiate the best outcomes, whether buying or selling. He is a Certified Relocation Specialist and a Certified Distressed Property Expert. For more information, visit help4strugglinghomeowners.com or gwsellshomes.listingbook.com or call (925) 370-7355.
