So, you have been hearing all about this “Short Sale” business, but exactly what is a short sale and how will it affect me?
The answer to the What is A Short Sale question is best described as a method in which the homeowner or Seller is able to sell their home – and this can be a primary residence (which is the most common type of short sale), second home or investment property – for the market value of the home but less than the actual mortgage amount owed on the property.
So, for example, let us look at a Boca Raton Short Sale transaction … Let’s say that a home is worth $200,000 but the homeowner either bought at the height of the market or refinanced the property to withdraw cash for repairs to that property and now owes more than the actual value of the home – let us reveal that the home has a mortgage on it for $300,000. Now the seller has had some tragedy such as job loss, health issues, disability, etc. and can no longer afford the payment on the home. The seller would either allow the home to go into Foreclosure, which is an option but not one that is recommended especially if the seller has the option of a Palm Beach Short sale which they all do, or a Deed-In-Lieu of Foreclosure.
Additionally, in a Palm Beach Short Sale, the seller and/or their real estate attorney who is negotiating the Palm Beach Short Sale on their behalf will request a deficiency release. A homeowner will not receive a deficiency release if they allow the home to go to a foreclosure sale. A deficiency release is where the Short Sale Mortgage Lender agrees to not come after the difference of the monies owed – in the above scenario, the $100,000 that was shorted to the Short Sale Mortgage Lender.
So the Seller contacts their Short Sale Mortgage Lender and says “Mr. Short Sale Mortgage Lender, I have had a disability, tragedy, job loss (whatever the hardship is) I need help. What can I do? What are my options? What is a short sale? Most Short Sale Mortgage Lenders will advise towards a Palm Beach Short Sale.
But here is the catch to the Palm Beach Short Sale, the seller will need to have a Palm Beach short sale listing agent on their side to assist them in selling the home quickly and price it according to the market. This is imperative as without proper pricing of a home going through the Palm Beach Short sale process, the property will sit on the market for a longer period of time thereby allowing the Short Sale Mortgage Lender to move forward towards the Foreclosure process. Other professionals are important in the Palm Beach Short Sale process as well such as the title company or title agent, real estate attorney and/or short sale negotiator. Without having a good team assembled, the Palm Beach Short Sale process becomes tedious and more complicated. These experienced professionals, particularly the short sale listing agent are there to streamline the Palm Beach Short Sale process.
As an example of this, our office had a Boca Raton Short Sale where the seller actually had 3 different contracts on the property prior to listing the home with our office here at Palm Beach Premier Real Estate and was unable to get the lender to “play ball”. The seller approached our office and let us know that they were “fed up” with trying to negotiate with the Short Sale Mortgage Lender and needed to sell the property immediately and asked us to be the short sale listing agent. Unbeknownst to us initially, however, was that the property was scheduled to be sold on the Courthouse Steps 3 weeks later (we found this out when they brought us all their paperwork).
As hard as this is to believe, our office had a buyer who offered cash for the home within 5 days of listing the property. As there was a real estate attorney involved in the process and we had the contact information for the short sale negotiator at the Short Sale Mortgage Lender office, working together as a team, we were able to get the bank approval within 7 days and close the transaction 2 days BEFORE the sale on the Courthouse steps, which sale was subsequently vacated.
What was interesting to note in this case is that the Short Sale Mortgage Lender point blank told our office that the reason they rejected the prior offers was that the seller was not using a Palm Beach short sale listing Agent. Remember, the Palm Beach short sale listing agent has information that the Short Sale Mortgage Lender will require in order to get the Palm Beach Short Sale to the closing table. As a Palm Beach short sale listing Agent, I found that comment from the Short Sale Mortgage Lender a pleasant surprise.
In summary then, to answer the question what is a short sale – the simple answer is that it is a solution to avoid foreclosure.
The bottom line is that now that you know the answer to what is a short sale and if you are in a situation where you require assistance with a Palm Beach Short Sale then feel free to reach out to Gia and Grant with Palm Beach Premier Real Estate at Info@PalmBeachPremierRealEstate.com
If you need a Palm Beach County Florida short sale listing agent or for more information on what is a short sale – call us on 561.395.8418 today