By now nearly everyone has heard the term “short sale” but what exactly does it mean? According to Wikipedia the term, short sale, means:
“A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens’ full amounts, whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically agreed to between the parties”.
A short sale is often used as an alternative to foreclosure because it mitigates additional fees and costs to both the creditor and borrower; however, both will often result in a negative credit report against the property owner. Many home owners who bought during the rapid up-rise in home values and are now looking to sell. Chances of being upside down in their mortgage are fairly high. Our Minneapolis short sale experts but also have sold many homes through the short sale process all around the mtero. Often times you only get once chance for a successful short sale. Call our Minneapolis short sale experts today for a free consultation.
Common Short Sale Questions
- How Do I know How Much The Bank Will Accept For The House On A Short Sale? Short answer… you don’t. Banks for the most part (some programs excluded) do not disclose ahead of time how much they will take for the house. However, it is important to know that what is owed on the house does not matter- the home is still only worth current market value.
- What Happens To The Deficiency In A Short Sale? Typically we are able to negotiate with the banks to release not only the lien on the property so we can sell it through a short sale but also the balance owed (better known as the deficiency). Now, the deficiency is not always waived. Some sellers end up contributing an amount of cash or signing new un-secured loans for part of the balance but this is really only typical on second loans known as JR mortgages.
- What If I Just Let The House Go To Foreclosure? We are not attorneys but in many cases the second lien holders especially lines of credit loans, equity lines and second mortgages hold onto many of their rights and may demand payment from you on the entire balance if you abandon the house. This is a situation where a short sale may be the better option.
- Do I Need To Pay The Realtor Working The Short Sale? Usually, no. We do not charge sellers for the short sale service nor do most short sale Realtors we work with. The commissions for selling are negotiated through the bank and come from the proceeds of the sale.
- I’ve Heard Short Sales Take Forever…? In the past, short sales were managed much differently than they are now. Banks like Bank Of America (BOA), Wells Fargo and others have adapted short sale policies that have increased the turn-around time. Many banks now use on-line systems such as Equator to conduct the short sale process. Realtors can simply log on and submit your short sale offer along with all the supporting documents and the process starts quickly. Most short sales today can be done within 90 days. There are even new companies such as Dignified Transition Solutions appearing that pre-negotiate short sales on behalf of banks which speeds the process even more.
- Can I Still Buy A New Home If I Do A Short Sale? It depends …Have you quit making your payments on your current home? Do you have many late payments on your mortgage, and how is your credit? I have done short sales for many people that were able to buy immediately but it depends on the previous questions whether you would be able to or not.
- What Will Be Expected Of Me To Do The Short Sale? There are some basic items that your Realtor will need for the bank which will usually include:
- 2 year tax returns
- Last 30 days pay stubs
- Recent 2 months bank statements
- Hardship letter describing why you need to short sale your property
- Financial statement
- How Do I Get The Short Sale Process Started? This part is just like any other listing or preparation for the sale of property. The standard listing agreement and marketing is used. The biggest difference is once we get an offer we send it to the bank for final approval. A short sale in Minneapolis or any other suburb should not be handled by an inexperienced agent. The Derrick Monroe Group are short sales experts in Minneapolis and all surrounding counties. We have closed many short sales and have an extremely high success rate.
If you’re ready to sell your property on a short sale or, want to speak with a Minneapolis short sale Realtor call DMG. We have listed and closed numerous short sales and we can help you through the process and get you moved on with your life. See what other sellers have said about us, who we’ve helped through a short sale, at the bottom of the page.
There are alternatives to foreclosure — let us show you how. Derrick Monroe is a Short Sale Expert in Minneapolis & the surrounding counties. See what our last short sale client had to say about us…
Derrick and his team did an outstanding job in assisting with a difficult short sale that involved a VA Loan and were always on top of things from the beginning marketing piece to the end sale result. When we encountered difficulties along the way, Derrick did an excellent job of immediately assisting in any way he could and demonstrated superb skills of negotiation and creative thinking in navigating obstacles. I would highly recommend Derrick and his team.” Sahri Kuechl