If a short sale seems to be the best option for a distressed homeowner, there are steps and requirements that must be recognized. The real estate professional must act prudently and professionally and be exacting and thorough in helping the seller evaluate the procedure and qualify for the process. Not every homeowner in a default condition qualifies for a short sale and not everyone can be saved from foreclosure.
One of the keys for an effective evaluation of the situation is to have open communication between agent and seller. Items that must be considered include the following:
* Does the homeowner have a valid hardship? Just because the homeowner is having a difficult time making ends meet, does not in and of itself, qualify for a valid hardship. Also, just because neighborhood property values have gone done and there has been a loss of equity, a valid hardship is not recognized. The kinds of things that are usually considered are: loss of job, business failure, a serious illness or accident with major medical cost, divorce or death of a spouse, or personal direct impact from a natural disaster.
* Will there be sufficient time to process and complete a closing of the short sale. This means time has to be considered for the default period in relation to the foreclosure requirements prescribed by statute and contract guidelines.
* Is the homeowner willing to contract with other finance, tax and legal professionals as may be necessary to effect the short sale?
* How does the sales price work out in relation to value and what would be an acceptable amount for the Third Party Lender to approve the sale?
* Does the homeowner have other financial obligations and liens on the property in addition to the default loan debt?
* Will the homeowner be cooperative and have the time and ability to complete the essential documentation, referred to as the package, in order for the overall transaction to be evaluated by the Third party Lender?
While the process is not outlined with precise steps and procedures, most real estate professionals, especially those with the SFR Certification from the NAR, have some valuable check lists and guidelines that are useful in examining the homeowner’s situation and providing assistance in this stressful experience of the distressed property and determining whether the homeowner, and the property, will qualify for a short sale.
St. George REALTOR® Jim Coleman is Associate Broker and Partner/Owner of ERA Brokers Consolidated. He Specializes in Residential, Investment and Commercial Real Estate, holding National Designations of Accredited Buyers Representative (ABR), Certified Residential Specialist (CRS), Resort and Second Home Property Specialist (RSPS), Seniors Real Estate Specialist (SRES), Certified International Property Specialist (CIPS), GREEN Property Specialist, and Certified Short Sale and Foreclosure Resource Specialist (SFR). You can contact him by e-mail at Jim@JimColeman4Homes.com. Call: (435) 674-0600; or write: Jim Coleman, 201 East St. George Boulevard, St. George, Utah 84770. This and other columns are available at www.WinningTalk.com/articles.