A short sale can be an excellent alternative for homeowners who are under water on their homes and need to sell. Short sales, in the past, weren’t a very popular option with lenders. Today, however, due to a radical difference in economical conditions than even three years ago, banks have become considerably more willing to agree to a short sale, as in most cases it can help mitigate the expenses of going through with a foreclosure. Recent changes in corporate policies and the current administration have also improved the chances of getting a short sale approved.
A homeowner is considered ‘short’ when the amount owed on his/her home is higher than current market value. Again, this is all too common in today’s housing market due to the current state of the economy.
A short sale occurs when a negotiation is entered into with the homeowner’s lender to accept less than the full balance of the loan at closing. A new buyer closes on the property to be short sold, and the property is then ‘sold short’ of the total value of the mortgage. For instance, the homeowner owes $150,000 on his/her home and it’s actual value is $135,000. The bank would then ‘fall short’ $15,000 at closing for the new buyer of the home.
For homeowners to qualify for a short sale, they must fall into any or all of the following circumstances:
Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
While it may seem like a straightforward process, it’s actually complicated and absolutely takes the expertise of experienced professionals. American Realty Group holds the CDPE® Designation and are ready to identify all possible options and, when possible, assist in the quick execution of a short sale transaction for St. Louis area homeowners.
