What are the Factors in a Property Short Sale Decision?

You May Need to Sell Because:

• You received a job transfer or need to relocate.
• You cannot afford your existing mortgage payment.
• Your Adjustable Rate Mortgage is adjusting, causing the rate to go up and an unaffordable payment increase.
• You cannot refinance under the new stricter lending guidelines.

Options for Selling

Your First Option is to List the Property for Sale:

• List the property for full market value and use the sales proceeds to pay off the bank in full.

Selling Issues Being Faced

• Due to changing market conditions, your property may have depreciated in value and you may owe more than the property is worth.
• With the lower property value, you may not have the additional cash needed to pay off all loan balances and closing costs to complete the escrow.
• You may already be behind in mortgage payments or your property is currently in foreclosure.

One Possible Solution a Short Sale

This happens when:

• A Seller owes more than the property is worth.
• The Seller has no cash to close.
• The Lender will accept less than what they are owed.

What Lenders Consider

• Mortgage is in foreclosure
• Homeowner hardship
• Overall financial situation & need to sell
• Depreciated property value / CMA
• Debt overload / Other defaulted loans
• Property condition

A Seller Should Understand

• You should seek tax and legal advice.
• The Lender will not be paid in full and the debt may not be forgiven.
• There can be no proceeds to the seller.
• If there is a second deed of trust, there may be more than one lender to work with.
• Generally, the Buyer will be expected to pay closing costs and the property sold “as-is.”
• Most lenders won’t consider a short sale until homeowners are behind on payments, and can demonstrate an inability to meet payments.
• You will need to provide a complete picture of your financial situation.
• You will need to cooperate with your agent and the lender to provide the documents requested.

Why would a Lender or Seller find a Short Sale appealing?

• Homeowners benefit by being released from an obligation they can no longer afford, and by avoiding the long-term negative consequences to their credit associated with a foreclosure.
• Lenders benefit because they can avoid the substantial expense of a foreclosure proceeding. Most lenders do not want to own the properties used as collateral for their loans, because the maintenance costs and taxes add to their cost and decrease profitability.

What are the Loan Effects?
Do you still owe any money after the Short Sale? (Example: A deficiency judgment)

• California has “anti-deficiency statutes” that protect certain borrowers from a deficiency judgment -the difference between the unpaid balance of the home loan and the amount produced by the sale.
• A California lender typically chooses a trustee’s sale foreclosure, which is quicker and less expensive than a judicial foreclosure.
• With a trustee’s sale foreclosure, the lender generally cannot go after a deficiency judgment.

To Get Started with a Short Sale:

• Sign the Listing Agreement, Short Sale Addendum, and other needed documents.

Your Agent will:

• With your written permission, prepare and negotiate with the Lender(s).
• Negotiate with potential buyers.
• Prepare required Lender documentation.
• Work with you to provide the lender with financial information such as bank statements, tax returns, and a letter detailing your hardship.

Are you behind on payments? Do you want to know what you can do? Please contact me and I will try my best to assist you.

I specialize in the cities of Alhambra, Monterey Park, San Gabriel, Rosemead, Temple City, Arcadia, Pasadena, South Pasadena, San Marino, El Monte, Irwindale, Monrovia, Bradbury, Sierra Madre, Duarte, Altadena, La Puente, Covina, Azusa, Hacienda Heights, Rowland Heights, West Covina, Diamond Bar, Walnut, Chino Hills, and surrounding areas.