A short sale is the sale of any property in which the proceeds of the sale are less than what is still owed on the mortgage. Short sales occur when a lender and borrower agree that selling the property and accepting a small loss is a better solution than the homeowner defaulting on the loan.
While the concept of a short sale is fairly straightforward, the process is not. If you’re facing foreclosure and considering a short sale on your property, you likely have a lot of questions. The answers to some of the most frequently asked questions about short sales in Florida are below.
What Are the Eligibility Requirements for a Short Sale?
Unfortunately, not all borrowers are eligible for a short sale. Eligibility requirements for short sales vary among lenders.
For the bank to consider a short sale, typically you must default on your payments. In some cases, a bank may allow a short sale on a home that is current on the mortgage, but they won’t do this often. You also must show financial hardship such as a divorce, job loss, or an injury or medical condition that prevents you from working. Lastly, you can’t have any large assets or investments, as they will contradict claims of financial hardship. Retirement funds are only considered if they are sizable.
Why Would a Bank Want to Agree on a Short Sale?
Lenders don’t actually want to take your home. Short sales are much more cost-effective for them, as foreclosing on a home costs the bank 10 to 20 percent more than a short sale.
How Does a Short Sale Work?
If you’re considering a short sale, you should begin the process by speaking to a foreclosure defense attorney. An attorney can review your case and determine if you are eligible for a short sale. If you’re not, a lawyer can also review your other options with you to avoid foreclosure.
If you are eligible for a short sale, an attorney will start working with a real estate agent to try and sell your home. Typically, short sale agreements do not allow the home to be sold by the owner.
Together, your attorney, real estate agent, and the lender will work together to get maximum proceeds from the sale. An attorney will tell you what is happening at every stage, and what is required of you.
Do I Have to Pay the Realtor’s Commissions?
Homeowners going through a short sale are often concerned that, at a time when they’re already experiencing financial hardship, they’re also going to have to pay the realtor’s commission. All realtors receive a commission when they help sell a home, including when that home is going through a short sale. However, you don’t have to pay this commission. The lender or bank that holds the mortgage is responsible for those fees.
When Should I Start the Short Sale Process?
You should speak to a foreclosure defense attorney as soon as you default on your mortgage, or know you’re going to. The earlier that you speak to an attorney, the earlier you can start to work on possible solutions, such as a loan modification, that can help you avoid a short sale and foreclosure altogether.
How Long Does a Short Sale Take?
The length of time it will take to complete your short sale will vary depending on your lender and the resources available. Short sales once took a notoriously long time to complete. Today, however, they typically take approximately three or four months to complete.
Can I Get a Short Sale and a Loan Modification?
A loan modification more preferable than a short sale, as it allows you to keep your home. If you are eligible for a loan modification, you should try this first before a short sale. If you request a loan modification after a short sale has started, it will halt the sale and you could potentially lose a qualified buyer.
Can I file for bankruptcy during a short sale?
Individuals who are selling their home through a short sale are also often considering bankruptcy. If the bankruptcy process is started during a short sale, it will again interfere with the sale, and potentially closing the property with a buyer. If bankruptcy proceedings are started before the short sale, it will only forgive the debt. The short sale or foreclosure will still need to occur. If you are considering a short sale and bankruptcy, it’s recommended you complete the short sale first and then start bankruptcy proceedings.
Will My Short Sale Be Approved?
Unfortunately, not all short sales close. There are many parties involved with a short sale, including the mortgage servicer, the investor, the mortgage insurance company, the buyer, and the seller. During the short sale process, any of these individuals can dictate terms or disagree with a sale that’s pending. This is very disappointing to borrowers, but a foreclosure defense attorney can help ensure a short sale goes through.
How Is a Short Sale Different Than a Traditional Sale?
The biggest difference between a short sale and a traditional sale is that short sales don’t generate enough profits to cover the cost still owed on the mortgage. However, there are other ways short sales differ, too.
One of those is that the agreement to sell is not only between the seller and buyer. The contract must also include a mortgage holder or lender. You can still accept a buyer’s offer, but the third-party named in the contract must still approve the sale. Due to this, short sales do also take a little longer than a traditional sale.
Need Help with a Short Sale? Call Our Florida Foreclosure Defense Attorneys
If you’re facing foreclosure, a short sale may be a good option for you. At Loan Lawyers, we are the Fort Lauderdale short sale attorneys who want to help you through the process. Call us today at (954) 523-HELP (4357) or contact us online for your free consultation to learn more about what we can do for you.
Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.