Sell My Home as a Short Sale St George Utah
If you are a seller considering a short sale of your home in the St George Utah area then you have come to the right place.
Short sales can be laborious and specific. As such, I as your Realtor, have teamed up with a third party intermediary that specializes in getting the short sale done in the quickest and most effective way possible*. Basically, if it were me, I would want to heighten the chances of getting a deficiency waiver as part of making the short sale work. That means the bank has signed that they will not come back on me later for the difference between what I owed on the home and what it eventually sold for. When it is not possible, still many people opt to try the short sale route as a better alternative rather going into foreclosure. If you are like me and like to get going down the road, sometimes I just want to talk to somebody rather than sit and read on the internet all day long. If this is you, call me now- *Call Brian.
*IMPORTANT NOTICE:
Fidelity Real Estate, PC [or Rocky Mountain Relief] is not associated with the government, and our [or their] service is not approved by the government or your lender. Even if you accept this offer and use our [or their] service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
Personal Ethics, Timing and Advantages to a Short Sale over Foreclosure
First of all, I do not pretend to know peoples situations enough to speak to the entire subject of proper reasons ethically to do a short sale, nor the best time to initiate one. However, I believe that many people are staring down this question in their own situation, and in feeling isolated in not knowing particularly the 'right thing to do'. In other words they have their own version of principles involving not letting themselves easily into doing a short sale, knowing that they are just 'passing the buck', so to speak, of their "own hardship" onto somebody else, or in this case to the bank that trusted a loan to them. This is normal to be hard pressed to understand the right answer. Perhaps because I see enough people doing them, and in being highly conservative myself, although not uninfluenced, I could share my own take on a general depiction of when it is 'the right time' morally and ethically to do a short sale. Again, I do not standardize this to anyone, but I share it to be helpful toward those who might need encouragement in highly distressed situations and are finding it hard to justify it with their personal ethics.
Personal Ethics
The following real life example will bring out some dynamics involved to evaluate possible "holding tight to a sinking ship" or when it might be a good time to "let go and let Short Sale". I'll start with one example involving a call I had from a nurse in Arizona who had transferred he and his small family out into a more remote area that allowed him to work as a nurse in an area that suited him nicely. However, he has begun to realize that it is not the best situation for his wife at home with no neighbors or social life. Well, we all know that a "Happy wife is a happy life" right? So, he is yearning occupationally or a transfer opportunity back up to Salt Lake, Utah. However, he cannot really make it happen with this other burden he has been shouldering- namely a home he is upside down on in the St George area for over a year now. It was his home while he was nursing here in the area, before he was transferred in his work to Arizona. He did not 'feel right' at that time in just unloading the home in a short sale process although it was presented as a viable or doable option to him all along. So, he put a renter in it and is taking a $450 per month loss for the last one year. He says that it is becoming a real strain to make ends meet and to foresee having enough money to be able to even move to Salt Lake, Utah. He says his dad thinks he should 'cut the strings' to the home and Short Sale it. Dad thinks he has paid enough of his debt to society in 'hanging onto it as long as he has'.
I could not tell him at that time what was the right thing to do for himself. I sincerely believe that it is not my place. However, I could give him my feeling that I think his dad could be right. 'Hey, you have tried to make it work and it is draining your financial reserves and in your home situation becoming increasingly stressful enough to warrant a move', I said. Additionally, he was upside down enough in his home for his situation for things to perhaps look more and more unrecoverable. I admire how far he took it and I have thought of him as a basis for my own standard and perhaps it can help you judge or 'let go at that certain point'. I explain more moral basis for judging that certain point at Short Sale The Right Thing to Do.
Timing
In considering these things, I would like to highlight how you can minimize the loss that the bank will take, that you are 'passing the buck' off onto. Often it is a matter to consider the timing of any missed payments to coincide with an offer on the home. So, often you will want to get the home listed sooner vs. later. Part of the reason is that an offer is often required for presenting your hardship situation letter to the bank in the first place. My theory is that just because it is a distressed situation, does not mean you cannot take a little control over how you exit the situation and a Short Sale provides better security on that, than does a foreclosure. Plus, I think the sooner you help the bank get the property off their books, the sooner their ledger is more preferably full of performing assets rather than non-performing ones. It can equate to a liability and opportunity cost for them, the longer it drags out. In other words, I don not think you need necessarily any missed payments to start the short sale advertising of the home. It may take a bit to get an offer in anyway. By then you should have some indications of being able to support a true hardship situation.
I am used to hearing from other Realtors suggested, that you need to miss at least three payments as a start. This is not necessarily true. However, I think it should be a time when and where you can explain and qualify under situations and circumstances of genuine duress, that you can heartily back up in a hardship letter you will present to the bank. I team up with Rocky Mountain Relief (feel free to call and pre-consult with Evan at 435-313-8363), for them to start the short sale process. They will have a good idea on how to time the following ingredients that go together: the number of missed house payments and the hardship letter to include short sale documentation paper work filled out- all ready to submit along with that first offer on your home.
My advise, but get theirs too, would be to NOT WAIT to start marketing the home in order to reign in the first offer on the home, as you OFTEN need that in order to submit your hardship situation to the bank. A while ago many banks have started to require an offer on the home prior to being able to submit the hardship situation letter and paper work. Rocky Mountain Relief, Evan (435-313-836), also a licensed non-competing Realtor, is able to advise on this process. I mostly handle the actual selling process. Listing and marketing your home is relatively easy to get started, that is what I do. The contact us button is at the top right of every page to contact me if you have any questions*.
Advantages of Doing A Short Sale
There are three possible advantages to doing a short sale over a foreclosure.
- Take a less endurable hit to your credit or ability to lend again in the future. It is generally a consensus that it is better than a foreclosure on your credit and ability to purchase in the future and in less years time I believe. Plus, remember on your credit report it has your short sale debt listed either as Satisfied, rather than it showing as Foreclosure (Unsatisfied).
- I need to confirm this, but in some states, after a foreclosure, the unsatisfied amount of money the home was shorted for on your balanced owed to the bank, can possibly be placed as a debt owed on your credit and in some states the bank can come back after you for the difference anytime up to 5 years after the foreclosure. With a short sale through the company I help utilize, they get a Deficiency Waiver about 80% of the time, which is what guarantees you that it can't follow you.
- You can time the manner and expedience of an exit strategy because during the time the short sale is being processed, you've virtually been unable and stopped all monthly payments. You get to control the exit a bit more with the wait that is involved to prepare for that time that is coming.
Beginning the Short Sale Process
Basic elements go into the beginnings of a short sale process. Some of these basic elements are as follows:
- Listing the home with a St George Utah Realtor and getting the first offer in the door helps to kick start the process of the bank recognizing the beginnings of a Short Sale with them. It used to be, that what started the process, was the ‘hardship letter’ and short sale paper work from the seller. Now, they pretty much all require an offer first, along with that paper work. So, get the ball rolling with your Realtor and allow for reasonable price setting on that home with utilized expertise from your Realtor. Price setting used to be important to you as a Seller, now you don't care as much. But you want to get this right for later on. That is one reason why you need a good Realtor, not just any Realtor.
- A typical entry question a Realtor will ask a home owner, for example, will be if they are delinquent in making any of their house payments yet. This helps the Realtor get an idea as to what the banks typically regard as the beginnings of real signs of needing to accept paper work, a hard ship letter along with the first offer. Be sure to consult with our short sale assistant company as to your timing of how you proceed on such matters. Give me a call and we can give you their information.
- Fill out Short Sale paper work from the Realtor or Realtor’s intermediary short sale assistant/company. We, here at SoUtah.com actually will take part of the commissions for doing a Short Sale out of our own, to hire a Short Sale Specialist company to handle the key correspondence paper work and follow-up phone calls that help make a typical 6 to 9 month process be trimmed down to a 3 to 4 month process. Actually the success rate with our assistant company for short sales is 3 to 4 months- this is phenomenal and unbeatable. You start this by having me as your Realtor to list the home on the MLS and get the whole process moving. Our numbers stand as exceptional against the rest.
- Please be aware that most often your Realtor commissions are included as part of the deficiency held in the sale of the home. In other words, you typically pay no to very little commissions when it sells. However, the bank can come after you later if you do not get a St George Utah deficiency waiver. This is why you will want to use me with my short sale intermediary company because they are so successful at this. So, particularly regarding commissions to your Realtor for your immediate situation [involving when the sale takes place], in most all cases that I've known about, the commissions are covered out of the proceeds of the sale of the home on the bank side.
Dynamics Influencing a St George Short Sale to Take Place
Basically, a bank can make more money on the sale of a home most often when they can avoid the cost of doing a foreclosure through a legal entity in the state or county in which the home resides. This can also be true even when a second lien holder or mortgage or bank is involved. The alternative for that second or third lien holder in not signing the offer/contract for approval for the sale to take place, is that they suffer the chances of getting less at the auction when it forecloses.
A foreclosure divides proceeds money to the lien holders by position. Often times the second lien holders get nothing if the sale did not yield enough money left over to also pay them off. The second or third lien holders will be flexible in signing any papers approving a short sale when bribed with a little money. Their approval is required in a short sale. The average going rate or small payoff or ‘consolation payoff’, is typically $3,000, to entice them to sign approval. This is on top of anything they already will be getting as a matter of proceeds being handed down by order of lien position, whatever is left. They will still suffer a loss, as is our definition in doing a short sale, that the proceeds are less than what you owe. However, it stands to be potentially less or nothing, than if they decided not to approve and it went to foreclosure.
It is risky (although an educated risk) to assume that any of the lien holder banks will agree and approve a short sale, although most end up folding and agreeing to it. In other words, you never know, particularly when many second lien holders, who are not accustomed to be enduring massive losses if they will agree to a $3,000 payoff. Often they can up it to $5,000 or more. In such cases, the first lien holders approval of this taking place, has to be obtained as well.
All these factors that can potentially stall a short sale, lead me as your Realtor, into using a company that specializes in getting it done. It involves a lot of phone calling, even if there is only one bank to deal with, that I do not have time for. I sell your home, my expertise, and let them work in their area of expertise. This quite frankly is how you are better served. And if I as your Realtor am paying them out of my commissions, that the bank pays for in the sell, then you as the seller are just being better served all around.
Summary Dynamics of a Short Sale
To go over this again, things influencing a short sale might be:
- Home owner does not want the more negative aspects on their credit involved in doing a foreclosure.
- If it is most commonly thought that Banks/Investors that back the loan(s) stand to lose more money by funding an actual auction and foreclosure process, than they do by accepting a short sale. Remember, if some of these banks are not giving a deficiency waiver, just maybe they stand to make more in the long run too. The perception among Realtors has mostly been that these banks will most likely never pursue deficiencies, even in cases where a deficiency waiver could not be obtained in behalf of the owner/seller.
- Separate short sale negotiations have to be initiated with each lien holder in which a deficiency will be perceived. You would think the separate entities would get together on things, but most often it is the Realtor or assistant that his having to pursue approvals by and between and for these parties. For example, the typical pay off to get the second lien holder to sign is $3,000. But many second lien holders have insisted for a $5,000 payoff in order to sign. Look at is this way, that is sometimes pocket change for them compared to the huge losses they incur. This complicates and sometimes necessitates the Realtor or assistant to go back to the first party to try to get and extra $2,000 out of them to make the deal work. If the extra $2,000 is not obtained or receded, it could derail the whole deal leading to a foreclosure, even after all the work by Realtors and Seller and Buyers that have put offers on that home. As such, having two or more lien holders on the home or two loan/mortgages can complicate the process. Most times it does not, enough to kill the deal, but sometimes it does. At very least, they take longer to get done.
- Most assume that the foreclosure is the more expensive route, but perhaps a bank will change its mind and see it as a better way to get a price closer to the appraisal that has come in on the home. The appraisal can come in unusually high up off from the offer they currently have on a home in Short Sale status. Remember, most short sales go through, but there is some that slip into foreclosure- there is no guarantee on anything at all. If that happens, the Realtor gets paid nothing for all their time and effort.
During Pre-Foreclosure
I wanted to discuss a couple options besides just allowing a foreclosure process to take its course. Short Sale is only one option that we all know about now. Another option that is not as much talked about is what is called Deed in Lieu of Foreclosure. Please be aware of this other viable option that still equates as a foreclosure, but it might limit the time of stress involved. You can consult with Wikipedia definition of Deed in Lieu of Foreclosure for definition and possibilities for you.
St George Utah Foreclosure Process and Procedure
For our Utah Foreclosure Process and Procedure in our local area consult that subtitle at our St George Distressed Properties 101.
How Short Sale or Foreclosure Impacts Credit Scores
While it is virtually impossible to tell just exactly how much given individual credit scores are affected there can be a threshold of guidelines in consequence that are the more extreme possibility listed at these more known websites. I would hope therefore that they would be a little more authoritative as to general guidelines on how your credit score could be effected.
Short Sales and Foreclosure Effects on Credit About.com
How Foreclosure Impacts Your Credit Score CNN Money Magazine
The HAFA Program
A new development initiated by the Federal government is leading to a minority of sellers, to qualify, after initiated work to meet guidelines, for a deficiency waiver through the participating primary lien holder bank/investor. That program is called HAFA. About 30-40% of the short sales that are conducted through my assistant company, qualify for this program, which can be a very good thing. Some incentives and requirements are thus as quoted off of http://hafa-program.com/:
"Participation in HAFA cannot save the homeowner from losing his or her property, but it can eliminate the effects of a foreclosure on the homeowner’s credit. Financial incentives for participation in the program include a $1,000 servicing bonus for lenders and a $1,500 relocation bonus for displaced homeowners. HAFA is designed for homeowners who have applied to HAMP for assistance but have had no success with their loan modification program. To participate in HAFA, homeowners must still meet HAMP’s eligibility criteria (principal residence, first-lien mortgage, serious delinquency, unpaid balance under $729,750, and a mortgage payment over 31 percent of gross income). Homeowners must be considered for HAFA within 30 days if they cannot meet HAMP’s requirements or if they specifically request consideration for HAFA. However, the homeowner only has 14 days to respond to a written notice that HAFA may be available to them, giving the lender time to meet their 30-day deadline."
These are some of the dynamics sellers need to examine when going the short sale route. I examine many other dynamics of a short sale as I discuss them with the buyers side of things. As a seller I would read up on all these things if you'd like in some additional links below.
If ever a Short Sale becomes "The Right Thing to Do" for you, will you please use my services and give back to me for writing this up for your consideration. I utilize a third party and pay for that specialized party to run our short sale through, for us, at my expense, at the cut from my own commission. So we both don't have to staff all those phone calls. They do it for us. Contact Brian.
Also, don't feel obligated on this one, but please feel free to email me with your own thoughts and if this has been helpful or not at: brianhabel at gmail.com.
