Secrets of Sales
A brief sale occurs when a creditor takes less than what is owed on a mortgage on the selling of a property. Sellers initiate a brief sale because their homes are worth less than the remainder of the mortgages and they can no longer make the loan payments. A brief sale is a substitute for foreclosure. Occurring infrequently in ordinary times, short sales have become commonplace throughout the housing-induced recession.
Patience
One of the most common complaints about short sales from the sellers and buyers alike is that short sales are time-consuming and that during the process the creditor doesn’t communicate well with the sellers and buyers. While a normal property sale might average 30 to 45 days, a brief sale may linger for months. Lenders often dismiss contractual obligations to respond to the buyers’ deal and counteroffers. Buyers can wait months and even months simply to find out the lender hasn’t accepted the deal or the home went into foreclosure. Many buyers walk away from the deal if they have not heard anything from the creditor in a week or two. If you discover a great deal in a foreclosure, then be prepared to wait out the lender’s process.
HAFA App
The Home Affordable Foreclosures Alternatives application, or HAFA, took effect in the spring of 2010. It’s designed to streamline the brief sale process. Lenders are not required to take part in HAFA, but those that do commit to a series of rules that help move the process along expeditiously. Participating lenders provide vendors with pre-approved short-sale terms therefore both sellers and buyers understand the terms upfront. HAFA lenders use standard property contracts, time-frames and deadlines. Sellers are entitled to $3,000 in relocation assistance, and lenders and mortgage investors get payments for involvement. If you’re a borrower considering a brief sale, ask your lender when it participates in HAFA. If you’re making an offer on a short-sale, find out which lender holds the mortgage and if it participates in HAFA.
Understanding the Short-Sale Status
Normally, unless a creditor participates in HAFA, then it will not allow a borrower understand whether it will agree to a brief sale until after the initial deal was made and forwarded to them. In its review of the initial deal, the lender will also review the qualifications of the vendor and make a determination regarding whether the deal is at or within the market value of the home. A seller should prove he is unable to make loan payments and has suffered some hardship that has resulted in this situation. If you’re a seller, be certain to have enough documentation to persuade the lender that you qualify for your sale and that the deal is over or at market value before listing your house. If you’re a buyer, then ask the listing agent if the home was approved for short sale and, if so, what the creditor’s terms are. Offers occurring after the initial deal move far more quickly than an initial offer.
Timing Contingencies
If you’re a prospective short-sale buyer, the most important thing you can do is be certain you have included deadlines for answers from the creditor at each step in the actual estate agency. Without them, you may end up held hostage in a contract for a protracted time period. With the deadlines, then you may choose to wait out the process or move on to a better deal.
