What Should I Know If I Am Considering a Short Sale?
A lot of people are interested in short sale and there are often compelling reasons to consider short sales as an alternative to foreclosure. It is possible to get a short sale done without even missing payments, but that is becoming increasingly rare. Often times you are required to miss at least a few payments in order to motivate the lender to approve a short sale.
The process is usually fairly standard. You hire a real estate agent and field offers for the property. You submit the best offer to the lender or sometimes multiple lenders to approve. The lenders will look at the borrower and determine whether they want to approve the short sale offer. In connection with that, you are going to be disclosing a lot of financial information to the lender which is a risk to be aware of in a short sale. They are going to be using that information to determine whether to approve the short sale and if so, under what terms and conditions. If they do approve it, they will give you a short sale approval letter. You will get multiple letters if there are multiple lenders. That is an important point in the short sale process to get legal counsel involved.
Some short sales are clean short sales and others are what are called “dirty short sales.” A dirty short sale approval means there are strings attached. Usually it involves a contribution of money from the borrower. Sometimes it involves a lot more money than the borrower should be paying to get the short sale approved. This is negotiable. Sometimes lenders try to reserve rights that they would not normally have under the statutes to pursue a deficiency or report something for tax purposes which are inappropriate. Other dirty things that sometimes sneak in are requirements that the borrower pay HOA assessments or back due taxes. These are also negotiable.
Depending on your facts you can insist on a clean short sale approval which means the borrower is not paying anything to the lender or anybody else to get the short sale done. It all depends on what the approval letter says and doesn’t say. Sometimes it can sound like the lender is releasing liability for the borrower but really is just releasing a lien which the lender has to do to get the short sale done.
It is important to know if you have a clean short sale approval. In a worst case scenario, it could be that in a short sale there is some residual liability to the homeowner or the borrower and that is certainly something that most borrowers do not intend when they get a short sale done. You want to make sure the short sale is cleaned up.
Be careful. You can’t depend only on what the real estate agent tells you about the approval because they are interested in getting the sale and earning the commission. Independent legal advice can be helpful. An experienced Arizona real estate attorney can help you determine if the approval is clean or help you negotiate elements of a dirty short sale.
If you are planning to sell your property fast and for cash in San Antonio, check out the Map of Home Buyers in San Antonio, TX.
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