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Wednesday, September 26, 2012

So you think you want to do a short sale...

Because so few people really understand what’s involved in the short sale process, many contact me to see if I’ll help them with it. Quite a few never get past that initial contact, once we’ve had time to chat about their situation. A short sale is not just something that you decide that you want to do, because you no longer want to pay for an underwater property, but that’s what a lot of people think. It’s not designed to help the guy who just retired unload his home so that he can move to the home in Florida that he just bought.

A short sale requires that a real hardship exists for the would-be short seller, not just an inconvenience. Hardships may include a job loss or pay cut for one or both wage-earners, a divorce, an illness or death a requirement to move and other real issues. It’s not a hardship that your home is worth less than what you paid for it or that you’d really like to move to a better home. A hardship is something that has happened in your life that materially impacts your ability to continue to service the mortgage payments. It’s also something that you’ll have to prove to a complete stranger.

In addition to proving your hardship, you’ll need to be ready to bare your financial soul – to reveal everything about your finances and assets to that same stranger. While they won’t go after anything in your retirement account(s), they will see and want any cash that is lying around and want to know why you can’t or won’t use any non-retirement liquid assets to help satisfy that mortgage debt. Most people who have reached this stage don’t have to worry about that, but a few who are trying to game the system do and they will get caught by the process – it is thorough.

And if you were one of those people who reached for the brass ring of home ownership using an 80%-20% set of mortgages, so that you had to put no money down, guess what – you have two strangers to convince to give you a break. It gets a lot harder with two (or more) loans outstanding. It’s not impossible, just harder.

To better understand the process and the requirements for documentation of your hardship and your finances, go to my web site and read the material there. The site’s not meant to make you feel all warm and fuzzy, but it is meant to get you prepared for the long and sometimes frustrating short sale process.

So; is there any good news to this post? Yes. The good news is that that process is a lot better now than it was and the banks are being a lot more realistic and getting better with the timing of decisions. It’s still a long process, often taking 3 to 6 months; but is used to take 6 to 9 months, so there has been improvement. If, after you’ve read through the materials at the site, you believe that a short sale is right for you, send me an email. I’ll call you and and we’ll have that initial conversation.

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