What Is A Short Sale?
Many Las Vegas homeowners are in a situation where their property is worth less than the amount that they owe on the mortgage, yet they need to sell for one reason or another.
A Short Sale is an alternative to foreclosure, in the fact that the seller and bank negotiate the terms of selling the property for the appraised value (or what a buyer is willing to pay in any given market) vs the higher amount of which is owed to the mortgage lender.
In many cases, banks prefer to negotiate a Short Sale vs taking back a property through a foreclosure due to the potential savings in time in and money.
How A Seller Qualifies For A Short Sale
If you are a homeowner that is, or will soon be, having trouble making your mortgage payments, banks consider three main factors when determining whether or not a seller qualifies for a Short Sale:
A financial hardship is defined as something that has changed in your the borrower’s financial situation between now and the time they originally obtained the home loan that is making it difficult to continue paying the monthly mortgage payments.
- Death In Family
- Job Transfer
- Medical Emergency
- Increase In Mortgage Payment
A monthly shortfall is a budget that shows it is impossible for a borrower to continue meeting their monthly mortgage obligations due to the financial hardship.
For Example, if a borrower’s monthly income is $4,000, yet their total monthly obligations are $6,500.
As it relates to a Short Sale approval, insolvency is basically when a borrower does not have enough liquid funds available to pay down the balance of their mortgage in order to sell their home.
This is obviously where it is beneficial to have the guidance of a specialized real estate attorney, Certified Public Accountant and Financial Planner, which Shelter has referrals to on demand.
If not negotiated properly, the seller may face a potential deficiency judgement from the bank(s) once a Short Sale has been closed.
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