Have you considered selling your home via short sale? Wonder if a short sale is the right choice for you?
With the economic troubles in the last few years, I’ve helped many sellers in the Indianapolis area sell their home via short sale. The short sale process can be confusing, frustrating & long – which is why working with an agent experienced in this area is crucial. Although the process can be frustrating, it is a much better alternative to foreclosure. Read more on the difference between foreclosures and short sales – Foreclosure vs Short Sale – What is the Difference?
If you’re considering a short sale, rest assured – you’re not alone. According to the National Association of Realtors, short sales & foreclosures accounted for 1/3 of the home sales in 2009!
Simply put – A short sale is when the sellers work with the bank to sell the home for less than what they owe on the home. For example: A home might sell for $300K but the homeowners owe $350K on their loan. Assuming the homeowners don’t have $50K to bring to the closing table, can’t borrow that amount and need to sell the home– their best option is to try to sell the home via short sale.
Where do I start?
The first step is figuring out if your home is a good candidate for a short sale. I perform a CMA (Comparative Market Analysis) on your home to determine the market value & what we think is a reasonable amount to sell the home for. After analyzing the CMA data and your current mortgage information – we can make an educated decision if a short sale is right for you.
There are many things to consider before you begin the short sale process.
- Are you still making payments on your mortgage? In most cases, you have more leverage with the bank if you have ceased making payments.
- Do you need to sell your home? If you don’t have to sell – a short sale might not be the best option.
- What do you plan to do after the sale? Talk to a mortgage broker about future lending – if you have future plans to buy another home.
- Do you plan to declare bankruptcy?
Once we have determined a short sale is the best course of action for you, you will sign a standard listing agreement as well as begin the short sale paperwork required by your bank. Every single bank is different with how they negotiate a short sale. Some banks require the paperwork as soon as the home is listed as a short sale, while others do not want any paperwork until the home has an offer from a prospective buyer. You will also need to sign paperwork allowing your Realtor to talk to your bank – to negotiate on your behalf. Most banks have representatives who specialize in negotiating short sales and work directly with realtors.
Once an offer has been made on the property, you- the seller- must first accept the offer. Once you have accepted the offer, it will be submitted to the bank for their acceptance or rejection – remember everything is contingent upon approval from the bank. The bank may either accept, reject or counter the offer. Unlike a typical real estate transaction, this response from the bank may take up to 30 days. Again, every bank is different – some smaller banks may respond much faster. Whether or not you have 1 or 2 mortgages also plays a major factor in the timeline of the banks response – as well as negotiations.
As the bank decides whether or not to accept the buyers offer, they may also negotiate with you, the seller, for a promissory note on a portion of the amount you are short. For example: The bank may accept an offer of $300K (when you owe $350K, plus realtor fees, closing costs, etc.) but hold the seller to a promissory note of $20K. You, the seller, may negotiate this offer from the bank
The good news for buyers is they still have the opportunity to have a professional inspection done on the property. Many banks are getting better about responding to these inspection requests. Although most banks would prefer to sell a home “AS IS”, they are sometimes willing to negotiate major structural/mechanical issues – as they realize a buyer most likely won’t be able to obtain financing for a home with major issues.
Once final approval has come from the seller’s bank, closing typically happens quickly – as the bank is anxious to close on the property.
Every single bank is different and every single short sale is different which is why it is so important to work with an agent experienced in short sales. I’ve closed (sold) 10 short sale listings in Hamilton County in the past year and have worked with a number of different banks – big & small – Chase, Wells Fargo, Fifth Third, Beltway Capital just to name a few.
If you would like to talk about the possibility of selling your home via short sale please feel free to call (317-373-3434) or email (Andy.Sheets@Century21.com). Whether your short sale is in Indianapolis, Noblesville, Fishers, Carmel or beyond- I can help. Our discussion is always held in confidence. Let me help you move on with your life!Andy Sheets, Realtor SFR Certified – Short Sale and Foreclosure Resource Certified by the National Association of Realtors _________________________