Columbus Ohio Short Sale Help and Information
If you bought your Columbus, Ohio home in the past few years chances are you have little or no equity. With the slow economy and adjustable rate mortgages chances are you might be forced to sell. A short sale may be the answer to your problem.
What is a short sale?
A short sale is when you owe close to or more on your mortgage than your Columbus property is worth. In these situations, lenders are sometimes willing to accept less than the full amount of the loan, commonly referred to a “short sale.”
Why does a bank agree to a short sale?
From the lender’s perspective, a short sale saves the costs associated with the foreclosure process which include attorney fees, the eviction process, delays from the homeowner filing bankruptcy, damage to the property, costs associated with resale, etc.
In a short sale scenario, the lender gets the property back faster, so they are able to cut their losses. Your Columbus short sale agent’s job is to convince your lender that they will fare better by accepting less money now instead of going through the lenghty and expensive foreclosure process.
How does a short sale work?
The lender will want some information about the property, the seller and the buyer’s offer. Specifically, the lender wants to know what the property is worth. The lender will generally hire a local real estate broker or appraiser to evaluate the property (called a broker’s price opinion or “BPO”). The lender will then review the information and determine what they consider an acceptable offer and terms for a short sale.
Can I do a short sale myself?
Negotiating a short sale with the lender is a difficult process. You will have to call to locate the lender’s “Loss Mitigation Department”. More than likely, each lender you deal with will have a separate name for this department, so be patient when calling. You can expect the process to involve a lot of waiting on hold and being bounced around a maze of automated voice mail systems. Once you get in touch with the right person, then the negotiating begins. An experienced Columbus Ohio short sale agent already has a rapport with each bank’s loss mitigation department and negotiators. This can save you valuable time in the short sale process. If your mortgage is backed by Freddie Mac or Fannie Mae it is a requirement you have a real estate agent handle the short sale process or you.
What information does the bank need from me?
The lender will ask for your financial information. It is best explained as unapplying for a loan. You must prove that you are unable to afford the payments. You must show all other source of income or assets to pay your mortgage have been exhausted. This process may involve as much, if not more paperwork than your original mortgage application! The information expireds and must be resubmitted every 60 days throughout the process. You will also need to submit a “hardship letter”, which explains why you can no longer afford your mortgage.
Finally, the lender generally wants to see the written contract between you and the seller. The lender wants to make sure you aren’t walking away with any cash from the deal. A preliminary HUD-1 settlement statement is often requested. An experienced Columbus Ohio short sale agent will have the necessary relationships with title companies to have them prepare this document.
What else can I expect to happen?
Don’t be surprised if your first short sale bid is rejected. Lenders aren’t emotionally attached to their properties, so they aren’t as likely to give you steal. Many short sales fall through if the BPO comes in too high, which is often the case. This is where most inexperienced Columbus Ohio short sale agents fall short. They get anxious to close a deal and don’t know how to properly negotiate with the lender. An experienced Columbus short sale agent knows each bank’s threshold and can help negotiate with the lender to come to an agreement. A short sale approval can take months and you may not get a second chance. Don’t put your financial future at risk!
A short sale is a complicated process and the success or failure of the deal depends on how it is presented to the lender. Many novice buyers and agents quickly give up on short sales because their first offer is rejected. Generally speaking, loss mitigators are good at spotting amateur agents. If your agent knows what they are doing, the loss mitigators are more likely to make a deal with you.