We get many inquiries about selling and buying a short sale property. That’s a property whose owner owes more than he or she can sell it for and is hoping the lender will accept less than the amount owed. In the parlance of the real estate and mortgage business it’s called “being upside down” or “under water.” And, about the only thing short about it is the lender gets short changed. That’s the bottom line.
Not All Home Owners Will Qualify for a Short Sale
There seems to be a fairly common misconception, that is, a home owner who cannot make his or her mortgage payment is eligible for a short sale regardless of why the payments are not being made…a preconceived notion that is absolutely untrue.
Three Parties Are Involved in All Short Sales
Let me explain…three parties are involved in the transaction: the Buyer, Seller and Seller’s Lender (or lenders). The lender is the linchpin as it is the lender who has the ultimate right of approval of the transaction. Let’s talk about the seller now.
Who is Eligible for a Short Sale?
First, the eligibility of the seller is completely at the discretion of the lender. Each lender sets its own rules and policies. Rules can and do vary between lenders and loss mitigation specialists. Usually only homeowners with a genuine, demonstrable hardship qualify. Genuine hardships are things like:
- Job loss
- Medical conditions
- Involuntary employment relocation that depletes assets
- Cannot pay loan after ARM adjustment (sometimes)
Who is NOT Eligible for a Short Sale?
Lenders do not consider the following scenarios genuine hardships:
- Home is worth less than the borrower paid
- Borrower does not want to make payments anymore
- Borrower does not want the home any more
- Borrower wants to buy another home
Definitely ineligible are those people who:
- Have significant assets or income
- Homeowners who have bought 2nd homes
Why Do Most Short Sales Fail?
Many alleged short sales are not attainable because:
- Seller cannot demonstrate and prove a hardship
- Price unacceptable to the lender
- Code violations involving habitability or corrective issues plague the property
A Short Sale is Not a Slam Dunk
Clearly, from the seller’s perspective, a short sale is not a slam duck. Sellers will be required to document and verify every statement and representation. I believe a seller should have legal counsel as a short sale is fraught with legal potholes that could become problematic and potentially costly for the seller.
Need to Sell a Short Sale?
Work with a professional Realtor who has experience with short sales. Need a great recommendation? We can help point you in the right direction! Call us at (512) 827-8323 or email us at info@11OaksRealty.com and we’ll put you in touch with an Austin short sale expert who can get your home sold so you can get back to your life.
How Much is My Home Worth?
Online real estate portals will give you an estimate for what your home is worth. Need a more qualified range of what your home is worth in today’s market? Try our Qualified Home Evaluation where one of our home selling specialists will prepare a more detailed analysis with the upper limit of your home’s value.