Questions & answers
1. What is a short sale?
A short sale is designed to avoid foreclosure. When you owe more than your home is worth and sell it then the difference between the loan value and the sale price is the amount you are short. New guidelines from the Federal government have allowed homeowners to sell their homes at a lower value and be forgiven the remainder by the mortgage lender. While it may affect your credit negatively dependent on the details of your situation, a short sale is nowhere near the kilotons of destructive power that a foreclosure brings to your credit. Typically the customers of Upside Down CA who go through a successful short sale are able to qualify for a loan again in three years. Give us a call at 916.442.6400 so we can assess your needs.
2. What is the process for a short sale like?
Firstly, we need to determine if this is the appropriate solution for your needs. There can be many factors in determining what the best course of action is. Call Upside Down CA to speak with us regarding your needs at 916.442.6400 or fill out our Contact Us form above.
Secondly, if we have determined a short sale to be the best option, we need to submit some documentation on your behalf. Typically a hardship letter, bank statements, tax returns, and other financial documents will be needed but the specifics vary by lender. Once we have all of the information required compiled for you we will send them to the lender for you.
Thirdly, we will market your property. As mentioned in the previous question What is a short sale? we will try to sell your home at a fair market value as agreed on with the lender. We post your home online to various sites as well as actively market to buyers and other agents. You are allowed to stay in your home while it is on offer.
Fourthly, once we have an offer we submit it to your lender for negotiation. We spend hours talking with your lender to move the process along. Due to some lenders’ lack of cooperation we will still keep your home on the market whilst negotiating with them. A higher offer as a backup is something we will actively seek and will try to get the offer as close to the actual value of your home.
Finally, we complete the transaction with your lender. If the offer is close to the appraised value of your home the mortgage company will typically give us the go ahead. Then your home will go into escrow and the transaction will close.
3. What requirements will I have to meet to get a short sale?
The requirements are dependent on the lender. Some no longer require proof of hardship to start a short sale but most will ask for information on why you cannot pay your mortgage in its current state. Financial hardship is a pretty broad term and most lenders have rather loose qualifications. Some of the common hardships our customers deal with are:
- Death in the family
- Medical bills
- Fewer hours
- Loss on investments
- An increased interest rate
- Updated terms for your loan
If you don’t have a hardship new Federal Housing Finance Agency guidelines may allow you to short sell your home. Extraneous assets or increased income may not disqualify you from a short sale. Call Upside Down CA at 916.442.6400 to see what we can do for you. We have other options available as well, just call!
4. How much will I have to pay?
We do not require any payment upfront. All listing costs, commissions, secondary lien payoffs, and closing costs will be paid in the closing proceeds. We don’t make any money unless your short sale is successful. You may even qualify for $3,000 to move out of your home through the Home Affordable Foreclosure Alternatives (HAFA) program. Call 916.442.6400 to begin your escape from negative equity.
5. What about my second mortgage? Is that forgiven as well?
California Senate Bill 458 was put into effect July 15th, 2011 to amend Civil Code 580(e) so that homeowners with a second mortgage would not need to fear deficiency judgments. Other states may or may not have similar laws but California is generally quite litigious and consumer rights protection is very important to the state’s constituents. This does make our job a bit harder as we have to negotiate with the lender and get the buyer to pay for the junior liens on the property. If you call 916.442.6400 or fill out our Contact Us form we will be happy to help.
6. Why can’t I just do my short sale myself?
California law requires you to use an attorney to facilitate your short sale. Some real estate agents are out there advertising their short sale services erroneously. Our experienced and knowledgeable broker and attorney oversees your sale and our success rate is almost 100% because if your home isn’t sold, we don’t get paid. 916.442.6400 gets us on your side.
7. How long will the short sale process last?
It can take as long as 60 days to receive a short sale approval letter from your lender but some cases are as little as 2 weeks. Once we have their approval it can take months to sell your home; however, with today’s market, there is very little inventory so homes are moving quickly. You can stay in your home until it is sold so don’t worry about having to move out right away. We can be reached at 916.442.6400 to move your short sale through its paces.
8. What will a short sale do to my credit?
Unlike a foreclosure, a short sale will not ruin your credit. A drop of 100 points from a short sale is not the drastic 250 points from a foreclosure. Unlike the 5-7 year wait to buy another home after a foreclosure; a typical buyer with a short sale in his history usually only needs 2-3 years with good credit. Another important factor to consider is the status of your unsecured debts such as credit cards and medical bills. Sometimes the overall financial picture is a bigger consideration and we can help you in other areas as well. Give us a ring at 916.442.6400 as soon as possible to preserve your credit score.
9. What is HAFA and do you offer it?
Home Affordable Foreclosure Alternatives program allows those who did not qualify for or failed Home Affordable Modification Program trial or those who want to short sell their homes. Freddie Mac and Fannie Mae stopped participating at the end of 2012 but for other non-GSE lenders the program ends December 31, 2013. We can help you get HAFA benefits if you qualify and other programs may be available. Upside Down CA is waiting for your call so we can help you today! Call us at 916.442.6400 or fill out our Contact Us form for us to contact you.
10. I heard a short sale could effect my taxes, is this true?
Yes, the short sale process can effect your income taxes. As to how it will effect your taxes, that depends on your unique situation. Make sure you have an expert accountant for the year’s taxes you sell your home. We can definitely assist you with some of the complexities in this process so call 916.442.6400 to get accurate information and start the process correctly.
11. My home needs repairs, can I still take advantage of a short sale?
Yes, you can take advantage of a short sale; repairs will be factored into the list price of your home. While it can make your home harder to sell, we should still be able to sell it if not as quickly. We still want to hear from you even if your home is in dire need, call 916.442.6400 now!
12. My rental is underwater, can I short sell it?
A rental property short sale is possible but it has different legal and tax ramifications. Some programs are not available unless the property is owner occupied. There are some tougher requirements for rental properties as well. Call the experts here at Upside Down CA at 916.442.6400 and we will jump through the hoops to get your property sold.
13. I keep hearing about short sale scams, how can I avoid them?
California law is very clear in that you will need someone to assist you every step of the way. Make sure your short sale advocate is a licensed broker and has an attorney on hand to advise them. If you have a second or third mortgage the junior lien holders may ask for a phantom payment so they will agree to the short sale. Do not do this as you would be committing loan fraud. Here at Upside Down CA our broker is an attorney and we have experienced and motivated support staff to assist with your case. We never ask for upfront fees to work on your short sale and no one else should either. Call us at 916.442.6400 to protect yourself and get some peace of mind.
14. My foreclosure notice came in the mail, what can I do?
Contact Upside Down CA as soon as possible. Complete our Contact Us form or call 916.442.6400. If the foreclosure process has already started we can help you avoid its completion. Lenders usually lose more money from a foreclosure than other options available, it is in their best interest that you not foreclose. A short sale is just one of the options to help you avoid foreclosure, we can help you with more if needed.
15. What if I want to keep my home?
We are more than just short sale experts here at Upside Down CA, we can help you with other options as well. We may advise you to leave the home but we understand that you have created memories and built a nest. We will do whatever we can to assist you. Call us at 916.442.6400 or complete our Contact Us form.