OBX Beach Living - Sarah Spencer

What is a Short Sale?

A situation in which the seller owes more money on the loan than the sale of the property will likely produce AND that seller is unable or unwilling to bring money to closing. The seller may or may not be in pre-foreclosure.

How is a Short Sale different than a Foreclosure?

1. The seller has more control. In a short sale, the sales price is first approved by the owner, then it is submitted to the bank. A contract is drawn up between buyer and seller. A closing occurs, between buyer and seller.
2. Short sales have less of an impact on surrounding property values.
3. Less impact on credit. Foreclosure remains a public record for 7 years and can lower credit score by 200 points or more. In contrast, if the owner is current with other payments, a short sale may only lower score by 50 points.

Are there Other Options for Distressed Homeowners?

Yes, other options are:

• Refinance—if you're current and it is your primary home
• Sell and bring cash to closing—if you have the difference in cash
• Lender workout—in some circumstances lenders will modify current loans to make them more affordable for the borrower
• Deed in Lieu of Foreclosure—this is when the borrowers agrees to trade the property to the lender in exchange for the cancellation of the note. Concerning effect on your credit, a DIL is not as goods as a short sale, but better than a foreclosure.

It is important to consult a finance, tax, and legal experts to determine which option is best.

What is the Typical Timeline of a Short Sale?

A short sale can take anywhere from 30 days to 6 months, depending on the amount of cooperation from the seller pertaining to all necessary documents, size of the lending institution, whether or not there are junior liens, and most importantly- the advocacy of the seller's agent. In all of the short sales I have closed in the past year, we've heard from the bank in about 6 weeks and closed 30 days after acceptance. From listing the property to closing the property, I recommend planning on 6 months.

How do I get started?

First, you need to engage the services of qualified finance, tax and legal professionals to decide if a short sale is best for you. Once you determine you want to go the route of short sale, call me. We will get started on your short sale package to present to the bank to see if you qualify. Hardship is shown by a letter stating evidence of any of the following:

• Job Loss
• Business failure
• Illness and medical costs
• Divorce or death of a spouse
• Natural disaster

Along with this letter will be your bank statements, tax returns, pay stubs and possibly credit card statements. Next, the property is listed, properly priced and marketed. Once a buyer presents an acceptable offer, the property goes under contract and that contract is presented to the lender. The lender takes anywhere from 30 to 90 days to review and if the lender accepts, the closing occurs within 30 day of bank approval. No proceeds go to the seller at closing.