What is A Short Sale

A short sale is where you you owe more than what your home is worth and you are asking the bank to forgive the difference between what owe on your mortgage and the market value of your home. For example, let’s say you bought your Newport Beach home in 2005 for $3,500,000 and put down $500,000 with a loan amount of $3,00,000. Now the property is worth $2,000,000 and there is a $1,000,000 difference between your mortgage and the current market value. With a short sale, you will be asking the mortgage holder to forgive the $1,000,000 difference and accept to sell the home at today’s market value of $2 million. This is basic snap shot of how a short sale works. Please keep in mind that all short sales are unique and that every real estate transaction and short sale will be different. Some banks have different ways of approaching a short sale so It’s important to work with someone who is knowledgeable about the Newport Beach Real Estate market and have to work with the banks on a short sale. We see a lot of outside short sale companies offering Newport Beach Short sale services but have never worked in the Newport Beach Real Estate market. Having a local realtor who is skilled at short sales is very important.

Will the Short Sale cost me anything?

When short selling your Newport Beach home it’s important to remember that all real estate fees are paid by the bank. In addition, short sale homes are sold “as-is” so there will be no cost for repairs. The bank will also pick up any past property taxes and sometimes pay for back HOA dues which allows you not to pay anything out of pocket. A goal of the short sale is for the homeowner not to receive or to pay any funds. Please keep in mind that all banks are different and what they will pay and not pay for is subject to each individual bank. Most of the time when the bank is not willing to pay for a certain item like back HOA dues then the buyer has the option to pay for these items. The banks will also sometimes ask for a minimal cash contribution in lieu of doing the short sale. Keep in mind that everything is negotiable and a perfect example of why you need to work with a real estate agent that is familiar with short sales to help you navigate through the different scenarios.

Who qualifies for a short sale?

Not all Newport Beach homeowners will qualify for a short sale. In order to qualify for a short sale you must show the bank adequate hardship in not being able to pay your mortgage on your Newport Beach home. Being upside down on your mortgage is not reason enough to qualify for a short sale. A lot of agents think anyone can qualify for a short sale and then realize four months down the road after the home has been on the market and an offer has been received that the bank flat out rejects the short sale due to inadequate hardship provided by the homeowner. We value your time and money and don’t want to tell you qualify when the bank will turn around and deny the short sale. Having your home on the market and having buyers come your home put’s a lot of stress on you both physically and mentally. There is no reason to go through all of that if your short sale is going to be denied by the bank. Our Newport Beach Short Sale agents not the right questions to ask you to see if you qualify for a short sale before we waste your time. Some of the keys things to show hardship would be loss of a job, not being able to work due to health problems, bankruptcy, divorce, relocation of work and death of a spouse, etc. For additional information on qualification please contact us today.

How much is my Newport Beach home worth?

One of the key factors in a short sale is to see how much your Newport Beach home is worth. First, you may be able to sell your home with enough money to pay off your mortgage and not have to do a short sale. Second, having a market evaluation of your home is important to see how much you will be asking the bank to short pay your mortgage. In addition, the bank will do there own market evaluation of your home when they considering whether to approve or deny your short sale. If you price the home too low then they bank will typically flat out deny the short sale. It’s key to price the home not too low so the bank thinks the offering price is fair and is more likely to approve the short sale. That’s why working with a local Newport Beach Real Estate agent is key. If you are thinking about getting a market evaluation please contact us today for a free evaluation of your Newport Beach homes value.

Should I stop making my mortgage payments in order to qualify for the short sale?

No. We are starting to see a lot of short sales being approved where the mortgage holder is current on their mortgage. One of the key things banks looked at in the past was to see if you were behind in your mortgage payments and used that as one of the key roles in determining if you qualify for a loan or not. Recently, banks are willing to work with homeowners who are still current with their mortgage but have adequate hardship in order to qualify for a short sale. It makes sense for the banks to want you to continue sending money into them while considering your short sale. Keep in mind that all banks are different and many of their investors will want to see missed mortgage payments in order for them to consider a short sale. It basically comes down to showing you have adequate hardship and that you truly don’t have the money to pay your monthly mortgage. We have worked with many of the banks and know what they have required with past short sales.

How long is the short sale process?

It depends on several variables. One of the key things is how much you are asking to short pay the bank and if you are dealing with one or two mortgage holders. We have done several short sales in just a matter of weeks where we were only dealing with one bank and the amount we were asking the bank to forgive was a small amount. A lot of smaller banks are also very easy to work with and don’t have the corporate offices to go through in order to approve your short sale. Also keep in mind that typically it will also take time to generate an offer on your home espically with most of the real estate prices in Newport Beach. A lot of investors are looking for short sale and foreclosure properties so your time on the market will be less than if your were doing a standard sale. We have seen some short sales take as long as 6 months. This is usually a result of the bank having too many short sale files to review. The banks also have several departments that review your file as well as the independent appraisal they will be doing on your home. All of these factors do take time and each short sale is different.

Should I wait before I start the short sale process?

Short sales take a lot of time so we recommend starting as soon as you can. Please keep in mind that it takes time to get your home on the market and and offer presented on your home. We make sure that the buyer is prequalified to buy your home before any offer is submitted to the bank. We also confirm the buyer’s motivation for buying your home and to see if he/she has other offers out on any other properties. We find a lot of short sale buyers who make offers on many short sale properties and go with whatever properties gives them the first approval. What we don’t want is to get an offer and have it submitted to the bank and then have the buyer drop out since they found another home to buy. The Short Sale process is a long process and buyers do get tired of waiting. Having a buyer is qualified and is motivated to buy YOUR home is the key to a successful short sale. That is our job as real estate professionals and we can handle every step of this process. That’s why we stress working with a skilled short sale agent in order to avoid the many pitfalls that could happen when doing a short sale.

Who will be negotiating with the bank?

Our short sale negotiators will be working directly with your bank. As part of the short sale process we have a letter of authorization form which allows us to talk with your bank regarding your short sale. Banks require us to have this signed and faxed into us. This will then be processed into their computer database where we will then have authorization to send an offer, bank statements and any other supporting document that they may require. Calling the bank on a regular basis is the key to a short sale. Regular updates that can be passed on to the seller, buyer and agents involved keeps everyone motivated to make this work. We see a lot of short sale buyers back out due to lack of communication of regular updates on the short sale status. Short sales take a lot of time and not being updated on a regular basis makes a lot of buyers uneasy about the short sale being approved. We pride ourselves in offering constant communication to all parties involved.

What is my obligation to do a short sale?

You may cancel your short sale at any time with no cost to you. A lot of clients are able to come up with additional funds and avoid having to put their home up for sale. We want to help you no matter what may occur. That’s our role as real estate agents is to make sure we help you with real estate needs.

Should I work with any short sale agent?

Not all real estate agents know how to handle a short sale. It takes a lot of time and experience to understand how to navigate a short sale and to help you, the homeowner successfully get your short sale approved and closed. It’s also important to work with a local Newport Beach real estate agent who knows the local Newport Beach market. A lot of Newport Beach homes are unique and having a local agent is key for correct pricing and also being able to sell and close on your Newport Beach home.

What are the tax consequences for doing a short sale?

First we must recommend you speak with you account regarding tax consequences for doing a short sale. We are real estate agents and not tax accountants and cannot give tax advice on the tax consequences for doing a short sale. We will be more than happy to recommend tax accountants in the area that can talk with you directly regarding this matter. Also keep in mind that sometimes banks will issue 1099′s for the difference for the amount of the short pay. This is normally referred to as a “deficiency judgment” and banks do issues these in some cases. A lot of homeowners will ask for a “non-deficiency judgment” from the bank so there will be no recourse with the 1099. All of these are great points to go over with your accountant to make sure you feel comfortable and knowledgeable about the tax consequences of doing a short sale.

How do I get started with the short sale?

One of the first things to do is to contact us and ask to speak with one of our Newport Beach Short Sale agents. You can also fill out your contact information on our contact us page and we can walk you through the first steps in order to start the short sale process. We will ask you a series of questions to make sure you are a good candidate for a short sale. Please keep in mind that not everyone will qualify for a short sale and It depends on several variables. If you do qualify for a short sale your home will put on the open market for sale as any other homes goes on the market. Be prepared for potential buyers coming through your home and open houses if so required. Once you get an offer accepted and the short sale package is sent to the bank showings will slow down dramatically and it’s basically a waiting game at that point.

Beach Cities Real Estate specializes in Newport Beach Short Sales and assist sellers looking to short sale their home. If you are looking to buy a Newport Beach short sale home for sale we can help with that too. We have dedicated Newport Beach short sale agents that understand the short sale home buying process and can guide you through each step of the short sale. As Newport Beach short sale experts we pride ourselves in helping our clients short pay the bank and to get their home sold. If you are thinking about doing a short sale in Newport Beach then please contact Beach Cities Real Estate today.