The house has been approved, but the listing says “SHORT SALE bank will approve 3% in help”, what does that mean?

There may be another option to save you and your home from foreclosure. Short sales allow you to avoid foreclosure and salvage your credit. Contact a knowledgeable RE/MAX agent to find out more.

Do you owe more than what your home is worth? Are you behind on payments and feel that you can’t afford your home anymore? Do you think that you wouldn’t be able to pay a Realtor to sell your home due to not having enough equity? These are all symptoms of being “upside down” in your home. In simple terms, your loan amount is higher than the current market value of your home. You may want to consider negotiating an Arizona short sale.

So what can be done with a situation like this in Phoenix or Arizona? A short sale might be the best solution for your needs. Many people have never heard of the term “Arizona short sale” or “Phoenix short sale”. A short sale in Arizona is when your mortgage company agrees to take a less amount owed on your home in an effort to sell the home before having to foreclose.

Most people who are “upside down” or owe more than their home is worth are left with only 2 options when they can’t afford the payment anymore. The first is foreclosure; obviously no one wants a foreclosure. Believe it or not, that bank doesn’t either. The repercussions of a foreclosure for both the homeowner and bank can be devastating. The homeowner loses a home and destroys his credit. The bank loses thousands in court costs and foreclosure expenses.

The second option is working an Arizona short sale. The advantages of doing an Arizona short sale or Phoenix short sale is coming up with a win-win solution for all parties. For example, when homeowners complete a short sale in Arizona, they have effectively stopped a foreclosure from taking place. And they have significantly lessened the damage to their credit. As far as the bank is concerned, an Arizona short sale has prevented them from repossessing a home. Repossessing a home or foreclosing on a home can cost banks tens of thousands of dollars.

Furthermore, banks are in the business of lending money, not owning homes.

So how does a homeowner qualify for doing an Arizona short sale or Phoenix short sale? This answer will vary greatly depending on the mortgage company at hand. Every bank has different policies and guidelines when negotiating Arizona short sales and Phoenix short sales. For example, some banks will require the homeowner to be 3 months behind before they will even consider allowing an Arizona short sale. Yet, other banks will allow Phoenix short sales even if the homeowner is current with mortgage payments.

Generally speaking, to do an Arizona short sale, banks will require the proof of financial hardship. This can include loss of job, divorce, overwhelming medical bills, and other various financial stressors. Furthermore, the bank will require that the home be listed with a licensed real estate agent. This is usually done to verify the value of the home. Homeowners are typically not allowed to try and negotiate and/or sell the homes themselves when doing an Arizona short sale or Phoenix short sale. In conclusion, if you feel that you can no longer afford your home, and you owe more than what it’s worth, consult with a licensed real estate agent or attorney regarding an AZ short sale.

Short sale refers to real estate properties sold “short” of the balance due on the mortgage loan. When borrowers fall behind on payments and cannot afford to maintain future payments, some mortgage lenders will allow the property to be sold to repay the loan.

Short sale transactions are multifaceted and require approval from the lender. Short sales are managed by the bank’s loss mitigation department. Employees who work in this department are known as loss mitigators and act as a mediator between lenders and borrowers.

Loss mitigators do not have the authority to approve or disapprove short sale requests. Instead, they gather and review financial documents provided by the borrower and make recommendations to the bank based on the borrower’s ability to make good on their loan.

There is no law requiring banks to engage in short sale transactions. However, lenders who received bail-out money are encouraged to offer short sales to eliminate non-performing loans from their books. The only way to know if your lender offers short sales is to contact them to discuss policies and procedures.

When real estate enters into foreclosure the property is ineligible for short sale approval. Borrowers who are struggling to maintain mortgage payments or have become delinquent on their loan should contact their lender immediately to discuss the option of short selling.

Two types of short sale options are available. The first and most common, is referred to as a Deficiency Judgment. This is the worst case scenario and should be avoided at all costs. The way short selling works is lenders allow borrowers to sell the home at a discounted price to attract buyers. Let’s say you owe $200,000 on your mortgage note and sell the property for $185,000. This results in a deficiency of $15,000.

When borrowers are unable to pay the deficiency amount, lenders issue a deficiency judgment for the balance. The judgment remains on your credit report until it is repaid. How long would it take you to repay $15,000?

Deficiency judgments can cause serious financial fall-out that can haunt you for years to come. Having an attached judgment places debtors in the “high-risk” category and can prevent them from obtaining credit of any kind. Those who can obtain credit usually pay a higher rate of interest and lower credit limits. Higher interest rates can amount to several thousand dollars over the course of time.

The second type of short sale is referred to as Payment in Full without Pursuit of Deficiency Judgment. This means the bank accepts the sale price as payment in full toward the mortgage note. Once the home sells, the borrower turns the keys over to the new owner and walks away from the property without owing additional funds. Obviously, this is the preferred short sale strategy.

Most banks require borrowers to have a buyer lined up before granting short sale approval. A few lenders allow borrowers to list their home through a realtor and provide a grace period of two to three months to locate a buyer.

Locating a realtor to list short sale real estate can be challenging. Short sales require a considerable amount of work. Oftentimes, realtors must accept less commission or forego their commission altogether in order to close the deal. Few realtors want to work harder for less money.

One under-utilized source for locating buyers is real estate investors. Many investors are attracted to short sale real estate because properties are sold below market value and can provide a good return on their investment.

An extra bonus of short selling to investors is many purchase real estate with cash. As everyone knows, cash is king. In this case, cash can expedite the transaction and help borrowers qualify for short sale approval.

Many elements are involved with short sale homes. The best defense for borrowers is to become knowledgeable about the process. If necessary, consult with a short sale specialist or real estate attorney for advice and guidance.

A real estate short sale occurs when a property owner sells their property for less than the mortgage amount owed to their lender(s). On the surface, this may seem like only the borrower benefits from such a transaction. However, that couldn’t be further from the truth. Note:  See our “Are You a Short Sale Candidate” to find out if you or someone you know are short sale candidates.

For discussion purposes we are going to assume a homeowner is a short sale candidate.

For the homeowner, a short sale makes it possible to sell their home for less than the total amount owed. The sale of the property releases the homeowner from their debts and obligations without having to file bankruptcy or endure foreclosure. The homeowner is able to save their credit, regain their dignity and their peace of mind. Lastly, the homeowner will be closer to rediscovering the American dream of homeownership because they are able to amicably resolve their lender(s)’ concerns.

For the lender(s), a short sale can be less costly than foreclosure and can provide an acceptable hedge against future price declines within the market. Also, for lenders that have become insolvent and need to liquidate assets, a short sale is a way to quickly raise capital when compared to the foreclosure option – a process that could take a year or more to accomplish. Lastly, for lender(s), a short sale means a guaranteed loss now as opposed to an uncertain loss in the future. This may be in many instantances a much larger loss.

For the investor buyer, a short sale offers them the opportunity to “Buy a property for as much as 40% or more below market value.” This discount means that they are able to make substantial profits.

For the home buyer, a short sale offers them the opportunity to buy a more affordable home. For some, this is the only way to experience the American dream and obtain homeownership, as the lower price relates to a lower and more affordable monthly mortgage payment.

For the Realtor or consultant, a short sale provides the opportunity to earn a fee or commission for helping a struggling homeowner. In many down markets short sales are the only viable option for continued real estate sales. During difficult economic times and recessions, one or two extra sales per month may be the difference between earning a living or looking for another job. Those extra sales each month can come from negotiating a short sale.

If you are a Property Owner and realize the benefit of negotiating a short sale for your property instead of facing foreclosure or bankruptcy, then we encourage you to Become a Property Owner Member today!

If you are a Realtor and realize the benefit of being able to negotiate short sales, sell discounted properties, and increase your ability to take future listings, then Become a Realtor Member today!

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