The Basics: What Is A Short Sale? Should You Do It With Your Multifamily House?
A short sale is the term used when you sell your home but actually receive less for it than what you owe to your mortgage company. It is also called a pre-foreclosure sale, because this is generally the only time that this kind of sale is conducted or allowed. The ’short sale’ term fits well because it involves being ’short’ a certain amount of money to your mortgage company based on the sale.
As an example, if you owe $150,000 to your mortgage company and you sell your home for $120,000. You are short (or underwater) $30,000 in the sale.
Should I Short Sale My Home [of multifamily property]?
Whether to short sale your home is a serious decision that shouldn’t be taken lightly. If you absolutely must sell your home and you will owe more on your loan than you receive from the sale of the home, it is in your best interest to approach your lender about a short sale. Short sales are typically brought on by a loss of a job, medical crisis or some other difficult financial situation that requires you to relocate or puts you behind on your mortgage payments.
How Does a Short Sale Work?
When you go through a short sale the overall process is basically the same as a standard sale. You are the seller, and you need a buyer for your home.
The major difference with this kind of sale is, that either you or your representative has to negotiate with your lender to determine how much you will still have to pay back once the sale is complete. There will be a formal contract drawn up that will discuss repayment terms and final cost.
There are not any state-approved real estate forms that are used for a short sale. With this kind of sale it’s always a good idea to have a lawyer in addition to a Realtor because there are many unique forms and contracts and not all real estate professionals deal with short sales.
What Happens After my Short Sale?
When your contract for sale is completed and your home has been sold, you will usually have three options – you can pay off the balance in a lump sum, you can make payments, or the lender can forgive your debt (it never hurts to ask your lender if this is an option – each one is different). There are tax issues involved with a short sale, so it’s very important to understand the impact on your personal financial situation. A short sale can negatively impact your credit score, so do your homework before you go down this route.
Who Can I Talk to?
If you are falling behind on your mortgage payments and considering a short sale, you should seek professional advice. It would be very smart to take advantage of a free consultation with a bankruptcy attorney. Nathan Brelsford is a local Phoenix Bankruptcy Attorney that can help you understand your rights and your options in your time of need. If you decide a short sale is your best option, you will also want a great local real estate agent, so you can find a buyer and get on with the next chapter in your life.
Note: This is an article posted by a guest author of Arizona Apartment Investor. Should you contact the author to utilize their services please do your own vetting and due diligence: It us up to you to determine if they can help you and their ability to do so. Thank you. Arizona Apartment Editor
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These are interesting ideas. Thanks for writing them.