Home Selling in Seattle>Question Details

Twiggy, Home Seller in Seattle, WA

Qualifying for a short sale

Asked by Twiggy, Seattle, WA Tue Sep 7, 2010

Our home has been on the market for over 90 days. We have now dropped the price so that we will not recover our original down payment. The buyers are driving the values of homes to slightly below what we owe the bank plus closing costs. We are going to be in default on our loan in two months due to serious health issues and job loss. Our Realtor has suggested a "Short Sale". At the time of filling out paperwork, we are not in default and have a modest savings account that we draw from as we are in the red by over $600. plus each month. We are waiting on approval of SSI and the local hospital "charity application" to better understand our true financial position. Our Realtor is pushing us to fill out the paperwork and explain the details in the "hardship letter". I personally believe we should wait until we get the results of the SSI and hospital application for financial assistance, as they could have a direct bearing on qualifying for a short sale. Help!

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Why not protect yourself and any assets you may have, before considering a short sale consult with an attorney who specializes in real estate--then go from there.
2 votes Thank Flag Link Tue Sep 7, 2010
Just from experience (see link).....you might be ahead to send a hardship letter to your loan comapny. Not to neccessarily begin the short sale process, but to make your financer aware of your situation. With the incredible influx of foreclosures and pre-foreclosures bombarding loan companies these days, it can take a VERY LONG TIME for an actual person to look over your paperwork. If you can prove that you attempted to make them aware of the situation in the very beginning, you will have a better shot at being approved for a short sale -- should it come to that. Companies will be more likely to work WITH you if you are upfront and honest about your situation. Better to cover your bases and not need it after all than to find out you desperately need help and have them tell you, "To little, to late!" - A few hours ago
1 vote Thank Flag Link Thu Sep 23, 2010
Hi,

I would suggest you find a real estate attorney and real estate agent that are short sale experts.
I would also contact an accountant to go over your financial situation. Short selling your home is not your only option. Your attorney or your agent would have to get in touch with your Lender to talk about what your options are. Other options might be Loan Modification, refinancing, although if your credit is compromised that will not be an option, deed in lieu of foreclosure, and some Lenders allow you to waive mortgage payments for several months so that you can catch up with your finances.
I hope that helps, good luck.

Carolyn
1 vote Thank Flag Link Thu Sep 23, 2010
Based on the information you have provided, you are technically considered to be distressed. We will always suggest that you talk to an attorney based on your exact circumstances. It is extremely difficult to ever catch back up after falling behind on your mortgage. I definately understand that this is not an easy decision for you though. I would suggest that you speak to an attorney immediately and consider turning your listing into a short sale if it makes sense after that discussion.
1 vote Thank Flag Link Mon Sep 20, 2010
The best place to start Twiggy is to speak with a Seattle WA Short Sale Specialist Realtor to offer free seattle short sale services. Check out -
0 votes Thank Flag Link Mon May 16, 2011
Hi Twiggy,

As a Realtor, we see so many different situations with sellers. Most recently, a short sale was approved and ready to close, when the seller was told they would need to bring 25% of the deficiency to closing. So happens, this seller needed $25,000 to close. Use a law firm that specializes in short sales.

All the Best,

Rose Tibbles
0 votes Thank Flag Link Fri Oct 1, 2010
Twiggy, to follow-up my prior post I am providing a link to the Making Home Affordable FAQs for your convenience. Again, best wishes to you! http://makinghomeaffordable.gov/borrower-faqs.html
0 votes Thank Flag Link Fri Oct 1, 2010
Hi Twiggy. My answer might be coming in late in the game for you and I hope that you find your situation more positive since your post. In addition, I am writing to you from a different state and each state has different laws and exemptions so it is really important for you to know what is ahead of you should you decide your best option is to short sale. As many have posted here, I agree that it is important for you to consult an attoreny and if (most likely) appropriate a tax consultant. Different prior events, such as refinancing your home, may have implications of which you should be aware.

A couple of ideas for you...

If your future financial outlook has a positive viewpoint, you may want to talk with your current mortage provider about any possible forebearance. That might give you a needed break from having to continue to make monthly payments on your existing mortgage.

You may also want to research the Making Home Affordable program (you can google or bing it, or whatever search engine you use). See if you might qualify for a loan refinance or loan modification program. What is key here is how much you owe on your mortgage versus the market value, and if your payments exceed 31% of your pre-tax monthly income, and also if you can realistically hold on to your home considering your future income.

Work closely with your agent as I'm sure that he/she has your best interest at heart.

One final thought on moving forward with a short sale. Time is your best friend here, the more you have the better for you. Perhaps you can move forward with a potential short sale process and have an agreement with your agent to have the ability to cancel (a listing agreement or purchase contract) if a more favorable avenue opens up to you.

Good luck! I hope it all works out in you favor.
0 votes Thank Flag Link Fri Oct 1, 2010
If you have not already contacted your lender directly, this is the first and most direct way for you to take control of your situation. Have your financial documents in order. We also strongly urge you to get a consulation with a real estate attorney/bankruptcy attorney in your area. Getting an opinion doesn't mean you have to do it, but why not explore and analyze every possible angle? Do yourself due diligence! Get more than one opinion.
Web Reference: http://www.lchometeamsd.com
0 votes Thank Flag Link Fri Oct 1, 2010
You may qualify for the short sale based on your hardship that you have outlined. I sugguest that you complete the short sale required documentation with your Realtor and allow them to list the property asap. This will get the ball rolling and will open the door to get offers to submit to the bank for short sale approval. From my experience, most banks will not move unless there is an offer submitted with a short sale package. So I suggest, don't wait ... also include in the hardship letter your current SSI and Hospital situation indicating it is under review...most likely they will accept the S/S package, however don't be alarm if they have certain bank conditions.
0 votes Thank Flag Link Sun Sep 26, 2010
Don't think that every agent or Realtor knows about a Short Sale. First, you should ask your Realtor how many short sales he/she has done and what his/her successful short sale closing rate is.

Learn more about a Short Sale: http://ShortSaleHomeExpert.com
0 votes Thank Flag Link Sat Sep 25, 2010
I'm very sorry to read posts like that but short-sale is the only way to save your score, costs of foreclosures are huge. The sooner you sell you home the better it is for you. If you are lucky to have friends and family - ask for their help and move with them for some time.- God Bless.
0 votes Thank Flag Link Thu Sep 23, 2010
Twiggy,

Again, no matter what information you receive... Every short sale is different, no two are the same. Consult an attorney, discuss the details of your specific situation, and then decide if it makes sense for you.

Take care.
0 votes Thank Flag Link Fri Sep 17, 2010
I'm very sorry to hear about your unfortunate predicament. As you know, Realtors do not practice law and short sales are very unpredictable, depending on the seller's circumstances, who the lender is, how much is owed, the market value of the property, etc. Each situation is different and there are so many variables that can affect the outcome.

Before moving forward with a short sale listing, I put my clients in contact with a good Real Estate attorney, so they can ask questions, know what their options are, and understand how their credit may be affected by the short sale. I would suggest consulting an attorney before signing any further paperwork. Hope this helps.

Best wishes to you.
0 votes Thank Flag Link Fri Sep 17, 2010
Ashtin I know you are probably trying to get this lady's business which is okay but some of your statements are respectfully incorrect. I don't think the current agent is trying to push Peggy (she already has the listing) but rather I believe the current agent is being proactive as to what she feels Peggy's realty is and what needs to be done, nothing wrong with that. Peggy's probably anxious right now because she has an assortment of stress simultaneously going on in her life..

Peggy, if you decide to do a short sale, your agent will give you an authorization form for you to sign allowing her permission to speak to the bank on your behalf, you didn't need it before now You clearly have a hardship especially when you have to shell out money from your savings every month to survive. Don't continue to throw good money after bad. You do not have to ask the bank's permission to short sale your home, not in this day and age, and it sounds like the deficiency, providing your agent finds a buyer timely, should be minimal for the bank. Do something Peggy, you're probaby priced too high, face the truth and again all the best to you, especially to your health.
0 votes Thank Flag Link Thu Sep 16, 2010
Twiggy, you are clearly experiencing hardship, and there apparently is not enough equity in your home to repay the lender. Do youself a favor and allow your agent to short sale your home. It's been on the market for 90 days, you don't have a buyer yet. Let your agent do what she needs to do to relieve you of this debt obligation so that you can focus on others things such as your health. All the best to you. Janet
0 votes Thank Flag Link Thu Sep 9, 2010
Your problem is not unique.
I would strongly recommend that you start the short sale approval process with your lender.
Explain your situation.

The other option might be that if you are "close" to the payoff amount the lender might let you pay the balance on a promissory note.

The problem is that as you approach the end of your escrow, the timelines are very strict. Your failure to properly plan ahead could produce legal liabilities that at this point are avoidable.
0 votes Thank Flag Link Tue Sep 7, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Speak to a good attorney ASAP who has already dealt with the short sale process. They are the best advisor on what legally needs to be done so that the process goes smoothly. Most charge the bank at closing not you. Shop wisely and ask around from Realtors who have already used someone.
0 votes Thank Flag Link Tue Sep 7, 2010
Most hardship letters these days are short and sweet. I believe your Realtor is correct. You need to act fast at this point to have enough time to successfully short sale before you get foreclosed upon.
0 votes Thank Flag Link Tue Sep 7, 2010
Twiggy,
Being "underwater" as they say is not the only reason to request a shortsale. Underwater meaning owing more than what the market will pay for it currently. There are many factors to which a property owner may want to request a shortsale.

If you are having a hardship, financially, or physically and you are getting drained monthly... it would be another reason to consider a shortsale. If you do not see yourself being able to come up with the monthly payments for however many months from now is another reason. One way or the other, the outlook doesnt look promising... I send you my prayers. Even if the SSi and the Charity do come in for you, how long will that last you? The home prices as you said continue to decline and there is no end in sight, at least, it is not going to drastically rebound and suddenly put you safely in the clear.

The best thing is to be realistic to the situation and to not have all your eggs in one basket... Fill out the hardship and whatever other docs and have them inline as a back up. It is better to be proactive and have everything in place, just in case and hope to not have to go that route.
Good luck.
Sincerely,
Richard "RJ" Kas (SFR, SRES)
"Representing the finest properties from Los Angeles worldwide"
KAS Properties - Coldwell Banker Previews International - Beverly Hills East
9388 Santa Monica Blvd, Beverly Hills, CA 90210
310.859-5334 office - 310.488.9826 mobile - 310-273-0670 fax ATT: RJ
RichardKas@gmail.com - http://www.RJforLA.com - DRE: 01352771
Sellers Buyers Investors Leasing Consulting
0 votes Thank Flag Link Tue Sep 7, 2010
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