SHORT SALES

Here's a quick primer on short sales:

• What is a Short Sale? A sale that takes place where the indebtedness is greater than the value of the home. In a short sale, the lender agrees to accept less than what is owed them so that a sale may take place.
• Why would a Lender consider a short sale? The alternative for the lender is to take the property back through the foreclosure process and sell it themselves later. The risk in doing this is that by the time the foreclosure has been completed: (a) the likelihood is that the property will be in poorer shape; (b) significant sums will have been spent to acquire it; and (c) chances are the lender will sell the property for less than what they can get in the short sale.
• Whey would a home owner consider a short sale? While there is still damage done to a home owner's credit in a short sale, it is less than if the property is lost in foreclosure. Also, while not guaranteed, the home owner's liability (for any shortage) will likely be less than losing the home through foreclosure.
• What are the downside considerations for a home owner in a short sale? (a) As stated above, there is still damage to credit--it isn't a "get-out-of-jail-free-card." (b) While a short sale may release the liens (mortgages) on the property to allow a sale, the indebtedness is not always forgiven. Sometimes it is, but every lender and every sale is different. (c) There are other potential tax consequences--you should consult a tax advisor before agreeing to a short sale.
• What has to happen in order to create a short sale? The home owner must submit a hardship letter and full financial statement along with a sales agreement with a new buyer for the property to the lender(s) involved for approval.
• How can I get more information? Give me a call at 269-488-0236 or email me at jared@jaredarnold.com.