Myth 1: You must be behind on your mortgage to qualify for a short sale. Lenders look for three things: a “verifiable hardship,” such as a job loss, pay cut, job transfer, divorce or serious illness; a monthly cash-flow short-fall or pending shortfall and insolvency; or lack of liquid assets that would allow you to pay down your mortgage. Homeowners often wait too long, and should consult with a qualified agent before burning through savings or trying such desperate measures as using a credit card to cover mortgage payments.
Myth 2: Short sales rarely get approved. They still take patience, requiring anywhere from 30 to 120 days for lender approval.
Myth 3: Banks would rather foreclose than approve a short sale. Banks typically lose 35 percent more on a foreclosure than a short sale. They also avoid the hassle and liability of vacant properties if they can approve a sale before foreclosure.
Myth 4: There’s no time to negotiate a short sale. It’s always worth a try. David has been able to stop a foreclosure date 2 days before the foreclosure auction was scheduled.
Myth 5: It’s fine to make simultaneous offers on short-sale properties. Multiple offers clog the system and could force sellers who think they have a solid offer into foreclosure when the offer is rescinded.
Myth 6: A short sale is a fire sale. Not just any offer will do. Home sellers may counter; their agents can only bring reasonable offers to the bank, which typically means a little less than market value.
Myth 7: Anyone can help navigate a short sale. Home-owners need to find a broker associate with special training, such as a CDPE, in handling distressed properties. Not just any real estate agent has the knowledge and experience to handle a short sale.
Myth 8: A short sale is not worth the effort. For buyers, short sale properties are often in better shape than foreclosures and are priced to sell quickly. For sellers, there is no lasting stigma for completing a short sale.
Myth 9: Short sales are as financially damaging as foreclosures. Unlike foreclosures, short sales are not reported on a person’s credit history and don’t present problems with employment or security clearances. Home-owners who undergo a foreclosure are ineligible for a Fannie Mae-backed mortgage for five years, while a home-owner who closes a short sale is eligible for a Fannie Mae-backed mortgage after only two years.
Myth 10: Short sale negotiations are adversarial. Successful short sales are more a matter of communication and organization—having all the paperwork in order and knowing exactly who needs what and in order to help banks approve a sale.
1 Short Sale Truth: It can be a hassle, but it beats a foreclosure!
David Simpson
Certified Distressed Property Expert, CDPE
RE/MAX Associates
4285 N. Shiloh Drive, Suite 205 - Fayetteville AR 72703
Cell: (479) 200-9914
Office: (479) 684-5757
Fax: (479) 684-5755
www.shortsalenorthwestarkansas.com
www.nwarkansashomesforsale.com
David Simpson with RE/MAX Associates in Fayetteville Arkansas is one of the few agents with the Certified Distressed Property Expert® (CDPE®) designation in Northwest Arkansas. He has helped many homeowners avoid foreclosure by selling their homes through a short sale. He has homes listed all over Northwest Arkansas including the Fayetteville, Springdale, Rogers, Bentonville and Bella Vista areas.
This site, David Simpson or RE/MAX Associates, LLC is not providing legal or tax advice. The information provided is for educational and informational purposes only. It is recommended that sellers considering a short sale should consult an independent legal and tax advisor for more information