Avoid foreclosure with a short sale

Owning a home has always been symbolic of attaining the Great American Dream.

Your private sanctuary in a go-go world.

Your sign of having made it.

Your dream fulfilled.

But for some — and maybe for you, too — owning a home has turned into the Great American Nightmare.

Get off the slow track and get on the Short Track

So what is a Short Sale exactly?

A short sale position occurs when your mortgage balance plus the costs associated with selling your house exceeds the sales price you’d be able to get from a buyer. When your lender approves a Short Sale, it agrees to forgive all or part of the shortage, or deficiency.

While the primary purpose of Short Sales is for homeowners to avoid foreclosure, any number of personal and financial reasons come into play, such as —

• Not being able to keep up with mortgage payments due to personal hardships, such as job loss or illness.
• Having to move because of job or family matters.
• Experiencing unsustainable losses on rental properties.
• Having no choice but to walk away from properties that won’t regain their full value for decades.

Find relief in short order

If you’ve been backed into a corner, there’s only one solution. Come out fighting with a Short Sale.

The good, the bad, the long, and the ugly of doing a Short Sale

Even though Short Sales offer many advantages, homesellers must prepare themselves for the most common stumbling blocks.

• Short Sales are really ‘long sales’ – It can take 6 months or longer to process a Short Sale. Just dig in your heels for the long haul and promise to stick to it until it’s done.
• Short Sales involve signing papers, providing documentation, gathering financial records, signing more papers, and providing even more documentation – Don’t let the process rattle you. Just go with the flow and hold out for a successful outcome.
• You can choose the wrong real estate agent - The first sign of trouble is when your house languishes on the market for more than a few weeks. By applying the right pricing strategy, your house should be under contract within a month.
• Your first buyer may back out … and your second … and your third - Don’t let this discourage you, because you can always find another buyer … and another, if necessary.
• You’ll lose the entire investment you made in your house - Reality really hits home when you realize you’ll lose your down payment and all the upgrades and improvements you put into the house. But once you understand it could be worse with foreclosure, you’ll be able to accept it and move on with your life.
• The bank’s terms for approving your Short Sale may not be ideal - For example, your bank may 1) leave open the possibility of coming after you for the deficiency at a later date, 2) require you to bring a cash contribution at closing (usually only for second loans or investment properties), or 3) require you to sign a promissory note for the unpaid balance (usually only for second loans).

These possibilities may scare you at first glance, but they’re like dogs whose bark is often worse than their bite. For instance, though the bank can hold you liable for the deficiency, chances are it won’t pursue a judgment once the Short Sale is completed. If you have to make a cash contribution at closing, most likely it’ll be an amount you can afford in exchange for the bank forgiving the remaining debt. Although you may have to sign a promissory note, often you can negotiate a deal post-sale that reduces the liability to pennies on the dollar.

In any event, if your bank’s terms prove to be too burdensome, you won’t have to go through with the Short Sale. This is your judgment call to make after examining the facts and seeking legal advice. If you choose to cancel the contract, you will not owe us any compensation for services rendered.

• And finally … the worst-case scenario … your Short Sale may not be successful - It happens, but not without first putting up a fight.

While the results of doing a Short Sale can’t be guarantee, the odds are on your side that you’ll be able to walk away with a heavy weight lifted from your shoulders.

Banks only care about their bottom line

While you would like your bank to give a damn about what happens to you, it’s just not in the cards. Banks are businesses, not charitable institutions. When they approve Short Sales, their decisions are based solely on their own financial considerations and not the human equation.

Because of this, your bank will analyze several factors to determine whether your house qualifies for a Short Sale.

• The reason you can’t continue making monthly payments
• Your financial position, including income and household expenses
• Your net worth and liquid assets
• The current market value of your house

When it comes to recognizing financial losses, banks take the painstakingly slow and methodical way of getting things done. In the case of Short Sales, they depend on their Loss Mitigation Departments, whose sole task is to ‘mitigate’ or alleviate the burden of their losses, and not yours.

Loss Mitigation Departments are filled with ‘banks’ and ‘banks’ of desks staffed by clerical personnel who are, for the most part, paper-pushers and phone-answerers. These men and women are assigned hundreds of files, each stuffed with hundreds of pieces of paper. Their job is to examine every piece of paper in the file, determine whether everything that should be there is there, and follow up on the pieces of paper that aren’t. At the same time, they’re juggling hundreds of phone calls from real estate agents, attorneys, title companies, and homeowners, all demanding action.

Don’t be mad or impatient with these hard-working individuals. They’re only doing their jobs the best way they know how.

Your bottom line

If you’re thinking about doing a Short Sale, you’re also worried about how much the services of a real estate agent will cost you.

Nothing. Nada. Zero. Zip.

When we take on your listing, you do not have to pay us anything. In essence, our services are FREE. Yes, the listing agreement you sign with us will include a sales commission. But the commission is due only if we are successful. In addition, the sales commission won’t come directly out of your pocket but out of the proceeds from the sale of your house, which ultimately goes to your bank.

When your lender approves the Short Sale, it has already worked out the math and the net proceeds it’s willing to accept after taking into consideration all closing costs, such as —

• Title agency fees
• Owner’s title insurance
• County transfer taxes
• Recording and other fees
• Real estate taxes
• HOA fees (amount may be limited)
• Attorney fees
• Real estate sales commissions

These typical closing costs are deducted from the contracted sales price, and the net amount is accepted in satisfaction of your mortgage lien. In this way, the sale can be completed and title transferred to the buyer.

You can take it to the bank

Though our office is located in the North Shore, we handle Short Sales throughout Chicagoland.

Even if distance makes it difficult for us to get together in person, we can establish a strong relationship wherever you live.

First, we’ll talk over your situation and get all your important questions answered. Then we’ll provide all the necessary paperwork to get your house on the market. After that, we’ll apply a strategic pricing strategy geared to bring in a contract ASAP while not jeopardizing your position with the bank. Once the contract is signed, sealed and delivered, we’ll turn everything over to an attorney, whose office will expedite your Short Sale file through the bank.

Rest assured that we’ll be in constant contact throughout the process. You’ll never feel out of the loop, and you’ll know exactly what’s happening every step of the way.