On the WATD radio show we asked Mike a few questions about things that homesellers should know before doing a short sale and here are the answers he gave us:
What are the advantages of a short sale?
The major advantage of having a short sale versus a foreclosure (or just walking away) is that the seller can control the process and buy themselves time to figure out what they need to do next. When the property goes into foreclosure homeowners lose control of the process and can be subject to eviction. Most of the time homeowners are just frustrated and want out but giving yourself time to plan the future even during such a traumatic experience can make all the difference.
What are the disadvantages?
The major draw back in a short sale is that the lender has to approve the short sale and decide that you are eligible for a short sale. To do this you have to show pay stubs and prove that you are at risk of defaulting or filing for bankruptcy and this could take a while. The lender then decides how to price the property and there is no one answer for each lender when it comes to pricing – they will get appraisals done and they will also look at how sales in that particular area are going or they can look at the specific conditions of the property itself.
What can make the process smoother?
You should make sure that you have all the documentation for all the lenders when you decide to go ahead with the process. Having an attorney deal with a lender at the beginning of the process can speed up the process because they know what documents are important and can get them organized upfront and most attorneys’ fees will come out of the transaction.
