Many people are unaware of what a short sale is, so don't be afraid to ask for more information. Here is a short and sweet guide to short sales. You can always call or email us if you have specific questions. We would love to evaluate your specific situation and help you buy or sell your home!
We at the Templeton Team and SearchHomesABQ.com specialize in helping sellers (and buyers) through the short sale process. If you know what you are doing and have relationships with the banks, then it isn't as bad as many say.
Get our packet of information on short sales!
Definition A short sale is when the seller owes more on their mortgage(s) for the house than what the house is worth. This can be a large shortfall or even just a few thousand. The seller then requests that the bank take less for the house, or sell "short" of what they are owed.
Requirements Obviously a bank requires that you have no equity in your house to sell short, but they also require a monthly shortfall of income/financial hardship or some other form of hardship that is forcing you to sell (change of job, loss of income, medical issues, divorce, etc). The government is actively legislating what these hardships can be, but right now, there is a plethora of reasons why you can ask for a short sale. The bank cannot require you to be behind on your mortgage before allowing you to do a short sale. This is a common misconception. You can still be making your payments, and request a short sale.
Should I do a short sale? 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. Something to keep in mind as you consider the option of a short sale is that 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. The bottom line is that your lender wants to work with you.
How long does a approval take? Depending on the bank, your original loan type, and your specific situation, once we have an offer in hand, a short sale can take 30-180 days. We are seeing increasingly shorter times for short sale closings, though, as the banks get better systems and the government steps in with regulations on how short sales must be done.
Credit Your credit may be affected by doing a short sale. It is nowhere near the devastation that you can expect from a foreclosure, however. In addition to hurting your credit, a foreclosure will prevent you from obtaining another mortgage for at least 7 years. Often, the worst thing for credit is missing payments. If you can avoid missing payments or becoming delinquent, your credit will not suffer like it could. Also, by avoiding foreclosure, you save yourself from being blacklisted from other types of credit as well like car loans, credit cards, etc.
Why would the bank do this? It is in the bank's best interest to sell short rather than go to foreclosure. Here are several reasons that your bank would like to a short sale: 1) Short sales end up costing them less money than foreclosing does. Also, sellers will often still live in the home and maintain it rather than let it go to complete ruin which is often the case with a foreclosure situation. 2) The government is encouraging banks to do short sales and are requiring them to negotiate with borrowers. There are penalties for not following these new regulations. 3) Investors (like Wall Street) decide which banks they want to invest in based on their bad debt/assets on the books. It is best for banks to quickly remove delinquent debt and especially to remove actual property that they have had to repossess. 4) The banks must keep reserves based on their bad debt. Holding reserves for this bad debt keeps them from lending to new borrowers. The sooner they can relieve new capital, they better it is for the health of the bank and its shareholders.
We have worked with many buyers in the last few years to help them buy a short sale. It is important to have good representation from your agent. Many real estate agents are inexperienced in short sales or do not like doing them. This results in poor help from your agent because they do not know what questions to ask, who to apply pressure to, and how to make the process work for you. We are experienced in negotiations with a variety of banks like the Bank of America, the Bank of Albuquerque, Chase Bank, Citi Bank, Nationstar Mortgage, GMAC, Charter Bank, and the Bank of Oklahoma. We will help you buy any short sale on the market. Please call us for more information. 505-750-3305
We have listed below a few of the most recent short sale homes to be listed with MLS in the Albuquerque Metro Area. If you are interested in searching for more short sale homes or refining your search with the specifications that matter most to you, you can use our Advanced Albuquerque Metro Search to find your next home.