A short sale is when a property is sold for less than what is owed on the mortgage principal balance, and is structured as a way for both the homeowner and lender to reduce their respective losses.
More often than not, short sales are reserved for situations of extreme financial hardship; prior to a bank beginning foreclosure proceedings.
Homeowners are usually required to prove the merits a short sale to their lender, which involves documenting that selling the home for less than its worth is the best and most viable option for all parties involved.
The short sale process starts with a letter of hardship. Skilled real estate professionals can assist you in understanding what needs to go in the letter.
To prove o the bank that a short sale is your best option, you’ll be asked to submit a cover letter which explains your hardship and to provide full financial disclosure. You’ll also need your original purchase contract, a balance sheet of your income and expenses, your asset statements and proof of income, and two years of federal tax returns in addition to other documents specifically required by your lender. Each lender has their own set of requirements but there are standard requirements common to all.
Lenders prefer handwritten letters and are more apt to agree to a short sale for homeowners who may have lost jobs or encountered significant medical bills. However, if this doesn’t describe your situation you may still qualify. Our team attorney will consult with you to help you determine if you are a likely candidate and to discuss all your options.
Draft a compelling letter and avoid extraneous details. Be short, be thorough, and be complete.
In addition, note that the following traits can help speed your short sale approval :
- The home is marketable
- A second lien holder, if one exists, is agreeable to a short sale
- A foreclosure is not scheduled within the immediate future
Choosing to short sale your home in Jacksonville or anywhere else, though, is not something a homeowner should pursue alone. Fortunately for Jacksonville homeowners, there are a number of qualified teams such as the Fennell Team who are can provide guidance throughout the process.
Before You Short Sale Your Home
Before you decide to short sale your home, there are a few things that you need to know. If you have previously consulted with a short sale expert, they should have already gone over these things with you. Short sales are a relatively new concept for most homeowners and even for a lot of real estate agents. Some agents simply refuse to deal with them (which is a good thing if they don’t have the time and resources to work them effectively). Other agents shouldn’t be working short sales because they don’t have the knowledge, time and/or resources to do them right.
One of the first things to be aware of before you short sale your home is to know what a deficiency is and how it can affect your short sale. Basically, the deficiency amount is the difference between what you owe and the amount of your sale. For example, if you owe $250,000 on your mortgage and you short sell your home for $175,000, your deficiency amount is $75,000. The deficiency amount is important because if the full amount is forgiven, you could owe taxes on it the following year or, depending on your lender and your settlement, they could try to come after you in the future for the deficiency amount. Our team, which consists of a real estate attorney, has a very good track record at getting a release of deficiency but there is no guaranty. Every short sale situation is unique.
If you are considering a short sale, you should also be aware of the foreclosure timeline. Some short sales take longer than others and you certainly don’t want to run out of time to complete your short sale. Obviously, the sooner you begin the short sale process after realizing you cannot continue making your mortgage payments, the better.
It’s also important to know what type of mortgage you have because there are programs available to help homeowners depending on their investor or mortgage type. Our team will assist you in all these matters.
Jacksonville, Florida is not unlike many areas when it comes to short sales. Short sales in the Jacksonville area have seemingly become the norm. I say “seemingly” because the fact is that only a little less than 1 in 4 currently active listings in the Jacksonville area is listed as a short sale… one in four is still a lot, though, and if you are one of those who is faced with trying to sell your house for less than you owe on it then you probably have more questions than answers.
Our goal is to help you find the answers and to make the short sale
process a little less uncomfortable for you.
As of this morning, we found 3,419 homes listed as short sales and/or pre-foreclosure sales in the greater Jacksonville real estate market (this includes single family homes and condominiums). With a total of 14, 560 listings, that means that about 23.5% of all homes listed for sale in Jacksonville are short sales.
An additional 1,184 properties are listed as Jacksonville foreclosures… and predictions are that the number of foreclosures in Jacksonville is going to continue to increase over the coming year. As we all know, foreclosures tend to bring market prices down across the board which means more and more sellers in Jacksonville will be looking at a short sale in order to get their homes sold.
In other words, short sales aren’t going away in Jacksonville anytime soon.
Unfortunately, even with all the press given to the current real estate market and to short sales in Jacksonville we are finding that sellers in the area are still very confused as to just what it all means and more importantly
…most sellers simply aren’t aware of the options available to them
when faced with the prospect of a short sale.
Because they are not aware of their options, far too many home owners wait too long to get started with the short sale process or to get aggressive with the process. And we are finding that many are putting themselves through a lot of mental anguish over their situation that can be avoided by simply learning their options and taking action.
Fortunately, however, there are caring professionals who have helped hundreds of folks in your exact same situation and who have, in some cases, been exactly where you are themselves. These caring professionals include real estate agents (like us), real estate attorneys, tax accountants and mortgage professionals. We believe it is important to consult each of these professions
…and we make it easy for you by putting you in
contact with them when you call us first.
You see, we don’t think that the automatic answer to every sellers problem is to slap a for sale sign in the yard. We believe you need to go into this with a clear understanding of what it means to you personally and what options you have at your disposal.
If you are facing the prospect of needing to sell your home in the Jacksonville area and think (or know) that you are looking at a short sale, you can call us and we’ll give you the straight scoop. The first thing we will do is to give you and honest and realistic picture of your homes value in today’s current market and what to expect in the future.
We promise not to inflate the value range
just to get you to list your home with us.
To do so does no one any good at all. To overprice your property means only that the eventual sales price will likely be much lower than if priced aggressively in the beginning and it only prolongs your time worrying about the sale and prevent you from getting on with your life.
The second thing we will do is to arrange for a free consultation with an experienced real estate attorney. You see, we are highly qualified to assist you with determining the market value of your property and we are also highly qualified and experienced in marketing your home effectively so as to expose your listing to the highest number of potential buyers possible and to take care of all the details of the sale from beginning to end. But we are not qualified to provide you with legal advice and we wouldn’t dream of doing so.
If you need to short sale or ‘think’ you might need to short sale your Jacksonville area home, give us a call. We will give you the information you need without any pressure to ‘list’ with us whatsoever. We’ll simply give you our honest assessment and opinion and point you toward your options so that you can make an informed decision and take control of your own situation. Who knows, there may be options available that don’t include selling if that is what you prefer… whatever is in your best interest is what we want for you.
And, of course, if you need or want to sell your home and are not in a short sale situation, we will help you too. Aggressive marketing is just as important for your listing as for a listing that is a short sale.
We look forward to meeting you soon!