How to Short Sell Your House
Thinking About Short Selling?
The term “Short Sale” has almost become ubiquitous with selling a house today. Since the economic downturn, many home owners have been seeking the refuge of short selling to avoid foreclosure. There are many things to be weary about, but there’s also a lot of advantages to selling your home as a short sale. And if you’ve done your research, you’ll know there’s a lot of things to keep track of. This is why the agents at Keller Williams have created a comprehensive guide to short selling and why you should do it.
Why Should You Do A Short Sale?
When home owners can no longer keep up with mortgage payments, they have a series of options to help them escape the foreboding doom of foreclosure – the most common being short sale. But why is short selling so popular? Well, there’s a number of reasons:
- Debt Forgiveness – Short selling offers the opportunity for bank lenders to forgive the remaining debt on a property. If you owe 200,000 and you sell for 150,000, the bank will forgive the last 50,000. The reason they do this is because the bank will make more money on a short sale than they will on a foreclosure. It’s pure money sense.
- Credit Rating – Going into foreclosure will have a severe effect on your credit rating. It’ll make it hard to buy a home later on in life, and it’ll make it hard to get a large loan. But short selling will have a lesser impact on your credit score. The reason being is because you haven’t defaulted on payments yet.
- Ability to Buy Another Home – One of the best benefits to doing a short sale over a foreclosure is the ability to buy another home in 3 years. Typically, a foreclosure will take double that time.
- Selling with Dignity – Over the years, “foreclosure” has become a stigma within the real estate market. People often view it as a humiliating time as they may be forced to leave their home at any time. Short selling allows you to sell your home on your time, saving you the embarrassment of losing the house.
- Mortgage Forgiveness Debt Relief Act – Because of the housing collapse, the U.S. government has authorized the IRS to exempt home owners from being taxed on remaining debt. For more information, click here.
How to Short Sell Your House
The actual process to committing to a short sale can be confusing and hard to follow at times. There are many steps and regulations to follow by each state, but to put it simply, these are the fundamental steps to short selling a home:
- Find an Agent – Everyone should always turn to an agent to help them with the process. Keller Williams has dedicated agents who specialize in short selling homes. They can provide you with expert advice and guide you along the long path.
- List the Home at the Right Price – This is where a certified short sale agent comes in handy. They can negotiate with the bank to help determine the value of the home and the correct price to list it at. You always have to keep in mind the bank gets final say to the price, so proper communication and negotiation with them is necessary.
- Get Your Papers Together and Wait – Once you have all the proper documentation in place and the bank has agreed with you to do a short sale, there’s nothing to do but wait. Typically, a short sale takes 30-45 days, and can sometimes last up to 3 months. Be prepared to wait that long and save your finances as much as possible.
- Negotiate – Upon agreeing to do a short sale, the bank will offer you a broker-price opinion (BPO), or appraisal. If a buyer makes an offer within 5% of the BPO, generally, the short sale will be approved by the bank and you can feel relieved that the process is over.
For more information on short selling, check out these articles:
To see short sale listings in the Jacksonville area: