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What is a Short Sale?
A short sale is an opportunity for financially distressed homeowners who have encountered hardships. In a short sale, an overwhelmed homeowner sells the home for less than the value of their current loan (or the net proceeds of the sell are less than what is currently owed). The lender accepts the sale as payment in full (or paid as agreed) for the loan. The difference between the sales amount and the balanced owed is called a deficiency.
A brief example would be someone that owes $200,000 on a home with adjustable rate mortgage that, once adjusted, the owners are no longer able to keep up with payments and needs to sell their home. However, under current market conditions, the home is now worth only $170,000. Working with the Fortuna Land Team, we will work to secure an offer on the home for $170,000, and then negotiate with the bank to accept the offer as paid in full. The Fortuna Land Team specializes in these transactions and we are proud to state that we have a 94% close ratio.
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How do I, as a homeowner, benefit from a short sale?
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First and foremost, it relieves the stress of being in foreclosure and being hounded by the mortgage lender; and it allows you to get rid of your big mortgage payment and move on with your life. A short sale allows you to stop the foreclosure and get a fresh start. This is the primary benefit to you. A short sale also prevents additional damage to your credit. Having some late payments and a foreclosure filed has already done damage to your credit. However, a completed foreclosure will do much more damage and lower your credit score tremendously. A short sale results in the mortgage actually being paid off, which reflects positively compared to a foreclosure. Also, it is important to note that the short sale does not cost you any money. You can remove this burden for free.
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Will a short sale “save my credit”?
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The short answer is yes and no, a short sale can save you from the worst credit disasters. By defaulting on mortgage payments and/or having a foreclosure filed against your property, you have already done damage to your credit. Your credit score has declined and those negatives will stay on your credit report for some time. However, it will get much worse if you allow the foreclosure to continue and do not try to short sale the property. Once a foreclosed property is sold at auction, your credit score is further reduced and when the foreclosure is completed via eviction and repossession of the home, your credit will be even further damaged. If you can complete the short sale BEFORE either of these takes place, then you can prevent that further damage to your credit. In addition, when the short sale is completed, it shows up on your credit as a "Paid" mortgage and a cancelled foreclosure, which shows future creditors that you did take care of your obligations. A short sale can help avoid this, but the key is not to wait. |
How do I get Started?
Getting started is easy! Contact us today, do not wait. The short sale process can be long and you don't want to run out of time before the foreclosure auction. We will review your information, determine if you are a good candidate for a short sale, and contact you with the appropriate paperwork. Remember, once you return the paperwork to us, it can be 30-60 days for a short sale to get approved. Fill out and return the paperwork as quickly as possible for your best chance at approval.
Are short sales guaranteed to work?
No. All the criteria MUST be met for a bank to even consider a short sale. They do not like to take a loss on a loan. Then the bank must be convinced to discount the mortgage enough to make it viable for an investor to make a profit for his work and risk. The discount must cover all repair costs, closing costs, broker commissions, taxes and still allow for a profit for the investor. In some cases, we do all the paperwork and wait several weeks only to be denied. Again, in those cases, we eat all costs of the failed short sale and you continue to own and live in the house if you choose. If the lender does not approve the short sale, we have no rights at all to the property and no transaction occurs. The purchase agreement we have signed becomes void.
What if a bank doesn’t accept the short sale?
Again, if the bank doesn’t accept the short sale offer, there is no transaction and the home is still owned by you and the foreclosure process continues. We have no rights to the property and you owe no money to us. |
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