Top 5 Short Sale Myths: A Message to Potential Short Sale Sellers
- Myth #1: I have to be an owner occupant to qualify for a short sale. Where did this myth come from? I’ve done short sales for investors and non-owner occupants. They happen all the time. I just listed a home where the lender told the owner to do a short sale on their rental property. You can sell your investment or rental property via short sale.
- Myth #2: I’m upside down and that is not enough to qualify for a short sale. First off, rarely do people want to short sell just because they are upside down. Usually there is a trigger: a job loss, interest rate change, divorce, etc. Every lender uses different criteria to approve short sales. The handwriting is on the wall, and some lenders understand that being severely underwater means you are at risk for default later on down the road. Many lenders prefer short sales to loan modifications. Being upside down impairs your ability to sell your home which can be a financial hardship.
- Myth #3: I need to be bankrupt to qualify for a short sale. In cases where a borrower has assets, many times banks will negotiate a small contribution in exchange for approving a short sale. They don’t advertise this fact openly, but it occurs with regularity. Sometimes, no contribution from the seller is required at all. You don’t have to be completely broke to qualify for a short sale.
- Myth #4: I need to miss payments to qualify for a short sale. Banks approve short sales without missed payments. This is also better for your credit. If you know that the time is fast approaching that you will not be able to make your payments, you can approach your lender about a short sale while you are still current.
- Myth #5: I can’t afford to pay a real estate agent’s commission so I can’t afford a short sale. Typically, you don’t have to pay your real estate agent’s commission when going through a short sale. All the major expenses of selling your home are included in a short sale. This includes escrow, title and real estate commissions. The real estate commission is deducted from the lender’s “net recovery” as an expense of sale.
Contact my office today at (805) 878-9879 for a free short sale consultation, or visit my website www.santamariashortsales.com for short sale basics.
* Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement — this blog does not offer legal and tax advice. This post offers general information only which may not apply to your specific situation.