Many homeowners ever only do a few property purchase transactions in a lifetime, and few ever encounter a short sale transaction more than once. Therefore, many are unfamiliar with the ins and outs of this process. In fact, many home buyers, property investors and even real estate agents are equally unfamiliar with the process for short sale purchases, which are a slight bit different from traditional real estate sale transactions.
So what are some of the most common questions about short sales, aside from the obvious concerning what a short sale entails? As a short sale expert, I receive lots of questions concerning short sales and the process used to complete these home sales. Here’s a look at some of the top short sale FAQs!
Q. Who qualifies for a short sale?
A. Each lender has slightly different requirements, but generally speaking, you must be delinquent on your home loan payments or in imminent danger of being late due to a change in circumstances such as a job loss. Most lenders require you to have no other major assets (such as a hefty bank account balance that could be used to bring the account current.)
A short sale is typically performed when the home is worth less than the amount that’s owed on the property. Otherwise, a traditional sale would typically be performed.
Q. How long does it take to complete a short sale?
A. It varies according to factors such as the location, the market conditions and the lender. New legislation means that short sales are processed much faster than they once were – usually a matter of days once an offer is submitted (compared to weeks or months as was commonplace in the past.)
From start to finish, the average short sale averages around 6 months, but this can vary according to market conditions. In most cases, a short sale takes 2-4 weeks longer than a traditional real estate sale.
Q. How do I move forward and begin a short sale?
A. To begin a short sale, it’s wise to consult an attorney, then contact your lender to discuss the option of pursuing a short sale. Virtually all lenders offer programs for borrowers who run into short term financial troubles, so it’s always wise to research alternative options that would enable you to remain in your home.
Q. Will a short sale hurt my credit rating?
A. Not necessarily. The impact of a short sale varies according to factors such as whether you were late on payments.
If you pursued a short sale before your account was delinquent, you can avoid serious adverse impact on your credit history. A short sale typically has minimal credit impact compared to other options like a foreclosure.
Q. Do I need to pay a real estate agent?
A. Most real estate agents work on commission which is paid out from the proceeds of the sale. Short sales generally do not vary in this regard.
Q. Will debts like HOA fees be deducted from the proceeds of the short sale?
A. Not necessarily, so it’s wise to research whether any delinquent fees such as HOA fees will be deducted or whether you will be responsible for tending to these fees on your own.
If you opt to pursue a short sale, you’ll want to be sure you work with an expert as navigating real estate sales and the short sale process can be a challenge, but this is where you can benefit from working with a real estate investment and short sale expert like Kristine Zelazo, better known as the Short Sale Gal! Call Kristine today at 800.664.0616.