Frequently Asked Questions - Short Sales

What is a Short Sale?

A Short Sale is the sale of a home when sales proceeds do not fully pay off the existing loan(s) and lender(s) accepts a discounted payoff to fully satisfy the loan.

When the short sale is approved, your existing lender pays virtually all sales costs, including commissions, escrow and title fees and repair costs. You get your home sold, the loan(s) paid off and you avoid foreclosure. And most importantly – you get to MOVE ON WITH YOUR LIFE!

Is a Short Sale right for me?

Mortgage lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage. If you are faced with a hardship that makes it likely you will be unable to meet your obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through foreclosure.

As you consider the option of pursuing a Short Sale, remember your lender is looking to limit any potential loss on your loan. By completing a Short Sale, your lender has arrived at a solution that is, for them, much better than a foreclosure.
Bottom line, your lender wants to work with you.

If I do a Short Sale, how much will I have to pay to sell my home?

Nothing. It’s true, in most cases you will pay literally no sales costs if your lender approves the Short Sale. All commissions, title and escrow fees, and even some repair expenses are paid by the lender as part of the Short Sale approval.

Remember, lenders approve Short Sales and accept the resulting loss in an effort to avoid bigger losses through foreclosure.

What about property taxes and Homeowners association dues?

These items remain your responsibility during the process of getting your short sale approved. If you can not make your mortgage payments and your property taxes are impounded with your mortgage payments, then you should just make your tax payments directly to the county when they are due.

Does the bank decide at what price I should list my home?

No, we show you the current market price for your property, then perform a calculation based on your type of loan. That should give us the price to sell your home and thus providing your lender the return they should need to net on your property.

How do I get started on a Short Sale?

It’s easy. If you would like to get prequalified for a Short Sale, we can do it online.
If you would prefer to discuss it on the phone, or set an appointment call 775-745-0295. There is no charge to you to get started. It is as simple as contacting us and we will get to work. If you decide that a short sale is not right for you, we will try to give you some advise on other options.

What sort of hardship would my lender consider legitimate?

To some extent, that will depend upon the mortgage company considering the Short Sale request. Generally, so long as the hardship is real and the mortgage company believes the loan is likely to become delinquent as a result, the Short Sale request will be processed by the Loss Mitigation Department. A big key to getting Loss Mitigation to accept a hardship is to submit a strong hardship letter. The hardship letter sets the tone for the entire file.
Below you will find a list of “hardships” that are common and frequently accepted by mortgage lenders. Once we get started with the process, I will send you actual examples of hardship letters from approved short sales.

  • Family illness or injury
  • Illness or injury in the extended family – particularly if it forces relocation
  • Job relocation when the property is equity deficient
  • Job loss or significant income loss
  • Divorce or split of domestic partners
  • Adjustment in mortgage payment or unforeseen increase in living expenses

I am current on my mortgage, will my lender consider a Short Sale

The answer is, probably. Some lenders will accept a Short Sale file for approval on loans that are not delinquent. Other lenders will not accept the file until the loan is delinquent. We can put your Short Sale file together within a couple days and submit it for approval. (Remember, there is no charge for this). That is the best way to determine if your lender will accept a file for approval on a loan that is current.

Why would a mortgage company agree to accept a Short Sale?

There are actually several reasons why a mortgage company would approve a Short Sale payoff, including the following;

Legal Concerns – Mortgage lenders have come under legal pressure to work with borrowers to equitably resolve situations where borrowers are unable to meet their mortgage obligation, particularly when the borrower makes an effort to arrive at a compromise solution.

Wall Street is Watching – Mortgage lenders rely heavily on their ability to package and sell bundles of loans on the secondary mortgage market. They need to sell these bundles of loans in order to put the funds back to work by loaning the money again and collect loan fees along the way. If mortgages perform poorly after they are sold it could impact the lender's ability to sell their loans on the secondary market. A successful Short Sale gets the loan payoff resolved quickly.
Asset Management Expenses- If a lender acquires a property through foreclosure, the property will be managed until it is repaired and resold. It is expensive to manage real property assets - homes – spread throughout the region, the state and possibly even the nation. Keeping properties maintained, keeping utilities on, making repairs and the administrative costs attached to these activities are all costs the lender would prefer to avoid. A successful Short Sale eliminates most of these costs

Reserve Requirement – Delinquent and non-performing loans place another burden on mortgage lenders. For all delinquent and non-performing loans lenders must set aside funds in reserve to deal with potential losses. These funds cannot be put to work generating new loan fees until the bad loans are resolved. A successful Short Sale lets the lender put more money to work.

Do lenders approve all Short Sales?

No. That is why it is critical to work with someone that has extensive experience at getting Short Sales approved. Our approval rate is over 97%...

From the presentation of the Short Sale package to the lender to working with the lenders Loss Mitigations Department, we know how to keep the file moving towards approval. Just because someone claims to be a short sale expert, it is up to you to ask the important questions,

  • How many short sales have you personally done?
  • What is your approval rate
  • Do you handle the process yourself or do you just outsource the work to assistants
  • Can I talk to some of your clients?

The first step is to get pre-qualified for a Short Sale. There is no charge for this, and it’s easy.
Just call Robin at 775-745-0295 and fell free to ask her all of those questions above.

I have two loans, can I still do a Short Sale?

Yes. We can work with both lenders (many times the same lender hold the 1st and the 2nd loans) to put together a Short Sale transaction. Even if the value of your home is below the balance of the 1st mortgage, we can normally get the two lenders to cooperate.

In the end, neither lender wants to own another home through foreclosure.

My property is in rough shape and needs work, can I still do a Short Sale?

Absolutely. In fact, lenders are more motivated to do a Short Sale on a property that needs work. The lender knows the risk of loss goes up when they foreclose on a property that needs lots of work.

Aside from expense of completing the work, lenders are simply not set up to get the work done. They are in the loan business, not the fix – it business.

Can I do a short sale on a rental (investment property)?

Absolutely, and as a matter of fact, just having to pay the mortgage on a rental property can in and of itself be a “financial hardship”. The only difference will generally be possible tax implications. Check with your CPA.

I am concerned about my credit, how will a Short Sale affect my credit?

The big key here is to avoid foreclosure. By nearly any measure, a foreclosure is the most damaging event your credit status can encounter - worse than bankruptcy in some cases. In the course of getting your short sale approved if you miss your mortgage payments, and these late payments will show on your credit. A short sale done the proper way (staying current on your payments-if you can), will generally show as “account settled” and do much less damage if any to your credit.

By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly . And even be able to get another home loan right away.

Can my lender come after me for the difference of what I owed and what my house sold for?

Yes, your lender has the right to pursue a deficiency judgment for the difference.  In the short sales that we have gotten approved and closed for our clients, we have not seen any lenders do this as of yet.  However, there is no guarantee that your lender will not do this, so what we do is to negotiate with your lender prior to close to ask for  language to be added to your short sale approval letter waiving their rights to a deficiency judgment.  

How long does the process take?

Once we receive an offer that you are willing to accept for your property, then we submit it to your lender and the approval process begins at that time.  From that date, we have had some short sales get approved in as little as 45 days, but generally the process will take between 60 and 120 day.