Hi, I’m Derik Lewis with Lawyers Realty Group, one of :k1:’s leading short sale teams and today we are addressing short sales. A short sale is basically the sale of your property for an amount that doesn’t pay off the outstanding mortgages or other liens. That means you will need lender approval to do a short sale. Why would a lender agree to do a short sale or cooperate with you? Their other alternative is to foreclose on the property. If they foreclose, 9 times out of 10, they are going to become the owners of that property. That means they have to evict you, maintain it, pay the property taxes and insurance all in an effort to sell that property to a new buyer. So if you are able to bring a buyer to the table and conclude a short sale that gets them as much or even a little less than what they would get after a foreclosure they are going to be willing to cooperate in that process. This way they can avoid all the hassles of a foreclosure.
The next question is why do you want to do a short sale? One big reason is you get to avoid a public foreclosure and a public eviction process. Those are very important to avoid. A short sale will obviously have a lighter footprint on your credit than a foreclosure will. Also you will be able to purchase again sooner, typically after a short sale, about two years afterward you will be able to buy again. With a foreclosure, we see some lenders will bar you from 5 to 7 years. I will say the number one reason to do a short sale is you have the ability in that process to negotiate away deficiencies and liabilities from second lien holders, the HOA fees that might be outstanding, and lines of credit. In a short sale you get to negotiate with those people and you get to use the buyer’s funds to hopefully pay them off, get them to settle with you or to otherwise go away.
If it goes to foreclosure, a number of those creditors will have the ability to sue you for the balances. A short sale provides you significant benefits over the foreclosure process. Again, I’m Derik Lewis with Lawyers Realty Group, one of :k1:’s leading short sale teams and I’m here to help answer any questions you may have. Take a look at our website, we talk about HAFA short sales and how you can get some money at the closing. We have other resources on our website at www.LawyersRealtyGroup.com, so check it out. Remember your lender has a lawyer and you should too.