If you are considering selling your home but believe you will not be able to sell your home for an amount needed to pay-off your home mortgage loan or loans, you may be eligible to qualify for a ‘short sale’ approval.
A short sale occurs when a home mortgage lender (like Bank of America, etc) agrees to accept a pay-off on your home mortgage loan that is less than what you owe. For instance, let’s assume you have a home loan for $ 1,500,000 and have noticed recently that the homes in your neighborhood are now selling at an average sales price of $1,000,000. In a short sale situation, your home mortgage lender agrees to take a loss of $500,000 and allows you to sell your home for around $1,000,000 (current fair market value of the homes in your neighborhood).
How do you find out if you qualify for a short sale? There are multiple factors that are considered by the lender in determining if you’ll be able to sell your home. These factors can include current income, financial hardships, and change in status (i.e. divorce, job loss, etc). The only way to find out if you qualify for a short sale is to begin the short sale submittal process which can take several months. Short sale approval processes vary in length depending on which mortgage holder services your loan, but on average you can anticipate a 3-9 month process. Most major banking institutions provide short sale approval packets on their websites with detailed instructions on the paperwork needed to begin.
The majority of banks require that along with your short sale request submittal, you also have a ready-to-go ‘buyer’ for your home. This means that should you want to short sale, you will need to list your home for sale with an agent, procure a buyer, and submit a fully-executed purchase agreement (subject to short sale approval). Traditionally, the agent you hire will assist you in coordinating all documentation required by the bank.
If you have further questions regarding the short sale process, feel free to call me for a private discussion at (714) 914-9060.