Short Sale, Short Sale, Short Sale!!!
I’m sure you’ve heard this buzz-word repeatedly over the past few months…especially if you’ve been paying attention to the Hernando County Florida Real Estate Market. The big question, though, is “What exactly IS a short sale?“ WELL - a short sale occurs when a bank agrees to take less than a homeowner owes as payment in full for the loan. The easiest way to explain this is with an example. Say you owe $200,000 on a very nice home that you bought in Spring Hill, but because the market has been declining, your home is now only worth $180,000. You go to the bank and say “I’ve got an offer on my home of $180,000 and I need to sell it…I know that I owe you $200,000…but I can’t afford my payments and if you don’t take the $180,000 you will have to foreclose on my home”. The bank then looks at the numbers and makes a determination as to whether they would rather take the $180,000 (and lose $20,000 on their loan amount) or foreclose on the property, sell it at auction, and hope to make more than the $180,000 when all is said and done (foreclosures are expensive for a bank…and you never know where the property will end up price-wise at auction…so in many cases, short-sales can work out better for everyone involved). Sounds like a great thing, right? SIGN ME UP! Not so fast…there are very specific conditions with short sales and whether or not banks will work with you on one. You need to have some sort of Financial Hardship. “Financial Hardship” does NOT mean: “I want to sell my house, but nobody will buy it for as much as I owe.” Desire to sell does not equal a hardship.“ I already bought another house and I need mine to sell because I can’t afford two mortgages. “Desire to purchase a different home does not equal a hardship. “I’m not going to come to the closing table with cash - I paid XXX for this house and I’m the one getting screwed here because of this market!” Again, wanting to sell your home does not equal a hardship. “My mortgage rate just reset and now my payments have jumped up by $500/month and there’s no way that I’m paying that!” Your mortgage documents clearly stated what your terms were when you signed them and rate adjustments do not immediately equal a hardship. So what IS a Financial Hardship? A few examples might be: “My wife died and as a result, I’m living on only one income and can no longer afford my payments…if you don’t work with me, you will have to foreclose on my home.” “I lost my job and/or had to take a $XXX/year pay cut…as a result, I can no longer afford my payments…if you don’t work with me, you will have to foreclose on my home.” “I got hurt on the job and my disability pay doesn’t cover as much as my old job used to pay, as a result i can no longer afford my payments…if you don’t work with me, you will have to foreclose on my home.” “My mortgage rate just reset and now my payments have jumped up by $500/month…I was planning on refinancing but now they’re telling me that I can’t and I can no longer afford my mortgage payments…if you don’t work with me, you will have to foreclose on my home.” Another factor that comes into play is “Can you afford to pay your debt?“ Example: My household earns $300,000/year but now my home is worth $20,000 less than what I owe…I want a short-sale. Your situation will most likely not be seen as a financial hardship by the bank. The bank will most likely determine that you can afford your payments, whether you want to or not, and will not forgive any debt. Hope this has cleared up the term “short sale” for you, as well as the criteria banks might look for when considering your particular situation and whether they’ll work with you to short-sell your home. If you’d like some further reading - check out my article about how short sales work once an offer has been received. It details the process from the time an offer is received, until the property is sold. Any questions? Call me any time at 352-397-5182 or email me at Josh@HernandoLuxuryHomes.com. I’d be happy to go over things with you and help you figure out what your best option may be for your particular situation. The scenarios mentioned in this post are by no means definitive. They are simply the opinions of a Real Estate Agent in Hernando County, Florida based on his personal experiences with the subject matter at hand. I am not a lawyer, and this does not constitute legal advice. Take care. -Josh Bookmark This Post
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About the AuthorJosh Hanoud is the #1 Top Producing Agent at Tropic Shores Realty in Spring Hill, FL and in the top 3% of all real estate agents in Hernando County, Florida (2007). He also happens to be the co-founder (along with Natalie) of the Hernando Luxury Homes website which aims to showcase the best properties that Hernando County and the surrounding Nature Coast has to offer. Whether buying, selling, relocating, or investing - Josh & Natalie are proud to offer a higher level of service. Contact them today at 352-397-5182 or Josh@HernandoLuxuryHomes.com to see what they can do for you.View other posts by Josh Similar Posts
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