Short Sales Secrets From Real Estate Expert

When the value of your home is less than the amount that you owe on your loan, you should consider a short sale. For the sake of argument we’ll say that your home is worth 350,000 and you owe 360,000 then a short sale would be a good option to pursue. However, if you don’t have to immediately sell your home then you could always wait and see what happens in the real estate market.

If you cannot wait out the market, then you have three options available to you. The first one involves bringing cash to the table. In the example above you would sell your home for $250,000 and pay another $10,000 to the lender out of your pocket to pay off the loan on your property. Your second option is to foreclose on you home. Your bank will foreclose on your home and evict you from the premises. They will sell your home to highest bidder at a foreclosure or Trustee’s auction. Your third choice is to pursue a short sale. A short sale involves contacting a specialist who will negotiate with the lender on your behalf. The specialist will explain your situation and ask the bank to take less than the value of your home for payment.

For example, you are have a buyer at 340,000 and your loan is for 350,000, then you would have to explain to the bank that there aren’t any buyers interested in paying a higher price for your home. You can pursue a short sale only when the bank agrees to take the lesser amount for your home.In some instances banks will accept a short sale even before someone has made an offer on your house. You can then advertise your property at the lesser amount to make it easier to find a buyer.

Short sales are not necessarily complicated but do require some work on your part and your agent’s part if one is involved.

You have to find the exact value you property is worth in this market. Market analysis is key to finding out what your property is going to sell for. Your real estate agent, or short sale specialist will complete this on your behalf. You can also use the Internet to help you in this process, there are many real estate sites that you can compare listings to help you determine the value of your home. Keep in mind that the market is fluid, meaning that it constantly adjusts based on many factors. The price you can advertise for today may be different in a month for now.

You also need to calculate your estimated closing costs. Items such as a title report, escrow, appraisal, attorney fees, agent commissions, unpaid property taxes etc. may add up to a substantial amount of money.

You have to find out the exact amount of money you owe on your home, include all loans you may have taken out on the property.

Calculating your equity is essential. In a normal case closing costs and loans will add up to less than the value of your home. When the opposite is true you can then pursue a short sale.

Your short sales specialist will be talking to someone in authority at your bank who is required to make these decisions. Usually lenders have a “loss mitigation department” that you can contact. Banks do not have to accept your short sale offer, but in most cases it benefits them. Some banks will not take a short sale unless you are behind on your monthly installments. You need to make sure your bank accepts short sales so get in touch with them as quickly as you can.

Understand where you stand with taxes. Do not underestimate this! Many times there can be a substantial tax obligation after a short sale has occurred. Make sure you talk to your accountant or short sales specialist to calculate your tax before going with a short sale.