Are you amongst the thousands of homeowners that owes substantially more on your home then what the property is presently worth?
If so, it’s crucial that you understand all of the options that are available to you. While everyone’s circumstance is unique, many homeowners have turned to the short sale process to remove themselves from this onerous burden. While in many cases it is often a good alternative, it’s critically important that you have a full understanding of all of the legal repercussions.
So let’s begin with an explanation.
When an existing lender agrees to allow the sale of a property for less than what is owed, it is called a short sale. The lender essentially ends up financially “short” of the full value of monies owed to them. While in a short sale transaction your lender may agree to release the lien on your property, it does not necessarily mean that they are cancelling the promissory note that you executed when you originally purchased the property. So, in a transaction you could potentially continue to be financially liable to the lender if very specific release language is not included in the final approval letter from your lender.
How does a short sale work?
The process itself is fairly straight forward. However, there are often many twists and turns through a reasonably extended period of time to get to the finish line! Here’s the typical flow of events in a short sale transaction:
- We recommend that the process begin with you speaking to an attorney and a tax professional to discuss options, possible outcomes and legal ramifications.
- You then list your property at a fair market value with a Real Estate Agent.
- Your agent markets the property and obtains a purchase offer.
- The purchase offer, along with all of the required supporting financial documentation is submitted to the lender or lenders for approval.
- Once you and the lender agree upon the terms, the transaction moves on to final closing just as in a regular real estate resale transaction.
Clearly, there is much to consider before entering into a short sale transaction. Scottsdale Law Group can provide you with accurate, professional information so that you can make intelligent choices for your future. It is assisting hundreds of clients with short sale transactions, bankruptcies and other means of asset protection. It can be your professional partner through these complex and difficult times.