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Short Sales - Q & A

Q: What is a real estate Short Sale? 
A Short Sale (also called a Short Payoff or a Pre-Foreclosure Sales) is simply a sale of real estate by a seller to a third party buyer in the which the selling price is insufficient to pay off all of the seller's loans, liens and closing costs.  As a result, the seller's Realtor petitions the seller's lender or lenders to reduce their loan payoff balance in an amount sufficient for the seller pay all closing costs and close escrow. 

Q: Describe the Short Sale Programs that you offer? 
We have three distinct Listing Plans to meet the Seller's unique needs, each requiring no cash out of pocket by the seller to close escrow:
  1. Our standard Accelerated Marketing Program tailored to meet the Seller's needs;
  2. Our 1 Week Short Sale Auction Program designed for immediate results and minimal inconvenience from buyer showings; and
  3. Our Short Sale and Lease-Back Program for sellers who want to stay in their home after close of escrow.  In this program we market mainly to investors who desire to buy a rental property
Q:  What are the benefits of selling your home as a Short Sale rather than letting it go to Foreclosure? 
A:  If you are at risk of defaulting on your mortgage there are no disadvantages to  attempting a Short Sale and if the Short Sale is successful there are many benefits, both financial and emotional, including: 
  1. The satisfaction of taking control of your outcome and selling on your own time and terms rather than a forced foreclosure and possible eviction; 
  2.  Short Sale satisfies all mortgage debt, taxes and association liens whereas deficiency judgments are possible after a foreclosure;
  3. The impact of a foreclosure on your credit is much more severe and will prevent you from financing another home for 5 years versus 2 years for a short sale based on Fannie Mae Underwriting Guidelines as of June 25,2008;
  4. Short Sale properties typically sell higher and are better maintained preserving higher values in the neighborhood.
Q: Are there any out of pocket costs to sell my home as a Short Sale?
No, there is no required out-of-pocket cost to the seller in our Short Sale program. If you have no equity, we will petition your lender to reduce your loan balance and pay all costs of sale, including real estate commissions. 

Q: I am behind on my mortgage and would like to try and keep my home before considering a short sale- What should my next step be?
Call your lender and ask to speak with their Loan Workout or Loss Mitigation Department.  Depending your unique situation, they might offer you a repayment plan on the past due amount, or they may qualify you for a Loan Modification designed to make your payments more affordable.  If those efforts fail, a Short Sale is likely your best option.  Call us for more suggestions on dealing with your lender.

Q: Can you help us negotiate a loan modification with our lender? 
 A loan modification is not really a negotiation but rather an agreement between you as borrower and your lender about what you can afford to pay.  You provide a current loan application and your lender will determine if there is a mutual benefit to lowering your mortgage payment by lowering your interest rate, lowering your loan balance and/or lengthening you repayment term.  You can also pursue this option while also pursuing a Short Sale.

Q: My Bank has scheduled a foreclosure sale on my home in three weeks.  Do I still have time to try a Short Sale? 
A: Yes but call us right away!  If we can get a Purchase Offer to your lender quickly, there is a good chance that they will postpone the foreclosure sale while they review our offer. 

Q: I have been contacted by Credit Councilors and Debt Relief Agencies offering to negotiate with my lender charging me fees of $2500 and up.  Is this approach a good idea? 

A: In my opinion, NO! Based on my experience working in a Loss Mitigation Unit of a major bank, you should make the call yourself and can expect to receive a similar outcome as a third party calling on your behalf.  The Loss Mitigation Representative at your Bank will review your current financial situation and propose a payment schedule and/or loan restructuring based on your abilities.  You can offer your input as to what you can and can't do.  The Bank's reps receive incentive compensation for a successful loan workout and will do their best to reach an agreement within the Bank's policies.  Rather than pay a 3rd party, use your cash toward your Bank offer! 

Q: Can I continue to live in my home while it is offered for sale?
A: Yes, you can continue live in your home throughout the marketing and escrow process up until the agreed close of escrow.  If your lender completes a foreclosure, our Listing Agreement with you is null and void and matters of possession are between you and your lender.  

Q: What is a deficiency judgment and how might it impact me? 
  A deficiency judgment is typically associated with a mortgage loan refinance or second mortgage in which cash equity is taken out of the property.  This is in contrast to "Purchase Money" loans taken out when the home was acquired which for owner-occupied properties in California, are not subject to deficiency judgment.  In a "cash-out refinance", the foreclosing lender can choose to foreclosure in the traditional and timelier process of a "Trustee Sale" or they can elect a more costly "Judicial Foreclosure" via a lawsuit in court which could allow the lender to pursue collection from the owner for balances owning after foreclosure.  While first mortgage lenders who are foreclosing generally do not pursue judicial foreclosure, the issue of deficiency judgments are more likely with 2nd mortgages lenders who, based on their estimate of the property's value, elect to pass and not foreclose and instead let the first mortgage lender foreclose, thereby preserving their own ability to file a lawsuit against the owner after the foreclosure for the balance owing. 

Q: How long have you specialized in Short Sales? 
A:  Our Short Sale experience dates back to the last Real Estate down cycle in the early 1990's when we helped dozens of homeowners by negotiating mortgage relief resulting in successful Short Sales.

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Realty Executives of Carson City
Serving Carson City, Gardnerville, Minden, 
Genoa, Washoe Valley and Dayton

1701 So Carson St., Carson City, Nevada 89701
(775) 885-7653 (775) 885-2151 (775) 721- 5980