My friend is 6 or 7 grand upside down on her home loan and wants to sell her house.

Anybody have experience with this?

What hurdles can be expected during this process?

Any preparations that need to be made immediately?

4/10/2010 9:53:00 PM

Get any new car loans or whatever now before the short sale trashes her credit.

4/10/2010 9:57:19 PM

Car loans "or whatever" are not what this thread is about. She is not selling due to foreclosure.

[Edited on April 10, 2010 at 10:06 PM. Reason : .]

4/10/2010 9:59:24 PM

from a buyer's point of view, I found the seller's banks to be wary of short sales. I've read and talked to a couple of people that said it can take 6+ months for the seller's banks to approve make a decision on the offer. If they reject it, everybody is back at square one. I ended up not going down that road due to the hassles involved.

Is she behind on her payments? I guess its an better option than foreclosure, but just being upside down 6 or 7 grand doesn't seem that bad. I mean its, bad, but nothing that the market won't eventually correct.

4/10/2010 10:11:38 PM

^ that's my understanding as well. it's a giant pain in the ass. but if ya have to get out of the house, it might be worth it for her

4/10/2010 10:23:29 PM

lmao @ 919

4/10/2010 11:12:28 PM

yeah the banks are very picky with short sales and since they are more than likely losing money on the house, they aren't in too much of a hurry to make it go thru....

4/10/2010 11:25:16 PM

I know someone very well who got directly involved in this. He was a mortgage broker in Florida and when that started going to hell, he had to find a different business. He got involved before the bottom totally dropped out, and he's been in short selling for several years now.

Short selling is hard unless you have some sort of leverage as a homeowner, but it really depends on what your friend is trying to get out of it. Is she just trying to get rid of it before there is a bankruptcy/foreclosure, or just sell it for less than she owes? If it's the latter, she's just screwed most likely. There isn't much incentive for the bank to accept less than the value, otherwise people would do it all the time.

Banks accept short sales usually when the homeowner has been threatened with foreclosure repeatedly, and it is clearly imminent. See, there are a lot of rules that mean whenever a bank has to foreclose on a property, they lose a lot of money, especially in NC, I think between 10-15% of the value of the house sometimes.

4/10/2010 11:29:24 PM

You can't short sell just because you have negative equity, the house must be at risk of foreclosure. Not sure if any of the homeowner bailout programs apply. I'm assuming being down 6-7 grand is not the reason she wants to sell her house. If she absolutely has to sell (for relocating or whatever), she may want to investigate financing the difference if she absolutely has to sell (renting it would be another option). Also where she is will impact how quickly the market recovers. Either one of the latter options will not reset the clock on first-time homebuyers programs (3 years), but a short sale is a difficult and time-consuming process and really designed to be a last option before foreclosure (and is entirely at the discretion of the bank).

[Edited on April 11, 2010 at 1:00 AM. Reason : .]

4/11/2010 1:00:13 AM

Quote :

"You can't short sell just because you have negative equity, the house must be at risk of foreclosure."

4/11/2010 1:39:49 AM

yea, if it's not foreclosure, this is just like selling a house at a loss

4/11/2010 2:16:28 AM

Nothing I have read has stated that risk of foreclosure is a requirement.

Quote :

"It used to be that lenders would not consider a short sale if the payments were current, but that is no longer the case. Realizing that other factors contribute to a potential default, many lenders are eager to head off future problems at the pass."

Is this true or am I reading it wrong?

Also, she will probably be financing the difference. What are the odds the bank lets this go through and asks for monthly payments to make up the difference?

4/11/2010 3:51:59 AM

i was also under the impression that you had to be in the foreclosure process to be eligible for a short sale. and that part about lenders being eager to head off future problems? bullshit

4/11/2010 8:17:59 AM

I know right...maybe things have changed a little though?

4/11/2010 12:31:27 PM

Coming from a buyer stand point, buying a short-sell house is a long and frustrating process. I would rather wait for that house to be foreclosed and buy it straight from the bank than buying it short-selled.

4/11/2010 1:48:16 PM

tell her to sell her house and come up with 6-7K to take to closing. why go through the hassle of a short sale with the bank when it is only 6-7K?

my wife and i sold our house in January 09 and we had to take 23K to closing. it still was not worth a short sale as we wanted to immediately buy another house and did not want a judgment for the 23K. we did buy our current house which was in foreclosure. we paid less than the homeowners did in 03 when it was built. we also had an appraisal and then refinanced after we moved in, thus no more pmi since the appraisal put our total owed at 78%. this is the best i have ever worked the system in my life! we have a house that is valued at 175K more than our last one and we pay $135 a month more.

4/11/2010 3:22:21 PM

^how does that work? I'm currently buying a foreclosed house. The lender is doing an appraisal next week, but from what I've heard, they usually only appraised it for the selling price at the maximum.

4/11/2010 3:32:29 PM

you will still have to close as scheduled. then you have to wait 60 days (maybe 30, i did 60) and refinance. The new bank or lender will send someone out to do an appraisal. It will not be based on anything but comps in the area. If it appraises for <20% than you paid you win. Even rolling the refinance cost into the new loan did not matter.

4/11/2010 8:47:54 PM

Because I had to look up what Short-Sale was...

http://en.wikipedia.org/wiki/Short_sale_(real_estate)

Quote :

"It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency."

[Edited on April 11, 2010 at 9:14 PM. Reason : .]

4/11/2010 9:12:56 PM