Las Vegas Short Sale Specialist answers the question................................
A “Short Sale” (Also referred to as: “Negotiated Settlement”, “Short Pay” or “Pre-Foreclosure”) occurs when a Lender agrees to accept less than the amount owed on the original note or total payoff, as an alternative to foreclosure. If the property is worth less than the amount owed on the loan, even a foreclosure would result in a loss for the Lender. Often a Lender’s bottom line will dictate the benefits of accepting less money in a sale now versus the cost of the foreclosure process and selling the home as its new owner.
The Short Sale negotiation process can be rather lengthy. It may take several weeks to several months for an approval. Many Lenders will have several layers of bureaucracy, insurers, and investors to maneuver through in order to get a Short Sale approved. It is important to be patient during this long process.
BUY MY HOUSE IS GOING TO FORECLOSURE, WILL I HAVE ENOUGH TIME? Maybe - maybe not. Accepting a buyer’s offer WILL NOT automatically stop the foreclosure process. However, many times a Lender can be persuaded to delay the foreclosure to allow an attempt to negotiate the Short Sale. There are no guarantees, but many sellers have been successful.
CAN I STAY IN THE HOUSE? The key word in a “Short Sale” is sale. The purpose of a Short Sale is to get the property sold prior to foreclosure. This is not a program that will stop a foreclosure and allow you to keep the house indefinitely. If successful, a new buyer will move into the home. Therefore, you should most certainly begin making plans to vacate the property.
HOW DO I KNOW THIS WILL WORK?
There are no guarantees. No promises will be made. A missed payment means
the Lender has the option to foreclosure. Presenting alternatives to the Lender that highlight the benefits of the Short Sale as opposed to moving forward with a foreclosure is part of the negotiating process. We are skilled at what we do, but NO GUARANTEES will be made concerning the Lender’s acceptance of the Short Sale.
WILL I GET ANY MONEY FROM THE SALE?
Not unless you are part of a Government Short Sale Incentive Program. A universal requirement of Lenders when approving a Short Sale is that the owner/ borrower will not get any proceeds from the sale of the property. The Lender will be accepting a loss on your loan; they will most certainly not allow you to profit from the situation.
WHAT HAPPENS IF THIS DOESN’T WORK?
Your house will likely go to foreclosure. A Short Sale is something tried
after you have exhausted your other options.
A Lender may offer a “release” which is a security instrument against the property in exchange for a repayment of less than the total amount of the loan. A release will allow the property to be sold without paying off the obligations of the loan. However, the loan is not satisfied. Advantages: A successful Short Sale will allow the property to be sold thus avoiding foreclosure. Disadvantages: The remaining debt on the property (sometimes called a “deficiency”) still exists.
You are still liable for the loan and still owe the money to the Lender. Reality: The Nevada Revised Statutes allow certain time periods for first and subordinate lien holders to pursue a deficiency judgment. Keller Williams and its associates recommend sellers seek the advice of a qualified expert on deficiency judgments.
A Lender may agree to accept less than owed as complete and total satisfaction of the loan and release its lien against the property. Advantages: Your note and obligation to the Lender are satisfied for less than you owed. When the property is sold, the debt is paid off completely. Disadvantages: You may have some tax consequences as a result of the debt relief. Keller Williams and its associates recommend you discuss potential consequences with a qualified tax advisor.
The Lender will require a review of a financial package that usually includes: two (2) months of bank statements, two (2) months of paycheck stubs, two (2) years of tax returns, a Financial Worksheet and possibly other information. The leading reason for delay and eventual denial of a short sale approval by the Lender is due to the Seller’s failure to cooperate and/or deliver the necessary documents in a timely manner. To help your success in this Short Sale, please immediately collect as much of this information as possible, complete the attached “Financial Worksheet”, and return it to this office. These things will help increase your likelihood of a successful Short Sale.
There are times when tough questions deserve an honest answer. A question homeowners like yourself are asking every day is, “Do I short sale my home or stay and tough it out?” Either way, to make the best decision, you should have all of the information in front of you.
Being able to see the current market value of your home and projecting when your investment will break-even and become an asset again is invaluable to your decision making process. With the Short or Stay Calculator you’ll be able to do so in a matter of minutes.