When it comes to selling your home in a hurry — often known as a distress sale — there could be a variety of reasons to do so. For example, you might be going through a divorce, have large medical expenses, or you might be facing foreclosure due to missed mortgage payments.
David Stanger of Westmarq Real Estate Group has experience helping people sell quickly through a short sale option, aiding many homeowners to navigate the recession and then the market crash of 2010. He has also studied real estate finance and investment extensively, staying on top of the latest developments.
The Short Sale Option
If you’re in a distressed financial situation, a short sale approach can help save you from filing bankruptcy, explains David Stanger of Westmarq Real Estate Group.
The basic premise of a short sale is this, he explains: the property is listed for less than what you still owe on it to attract buyers quickly. However, your lender will still need to agree to the sale, and may need some convincing about why it’s the best approach. That means even if you agree to sell your home for an agreed upon price, the bank will still need to sign off on it.
A short sale can happen very quickly — the government made some changes to help streamline the process. While many short sales can be completed rather expediently, around 60 to 90 days (on average), some transactions can take considerably longer — up to a year depending on circumstances, notes David Stanger.
The Type of Loan Impacts Timeline
David Stanger of Westmarq Real Estate Group says that while short sales can be relatively speedy and save your credit, the original type of bank loan you have and the amount of paperwork required can be factors in how quickly the sale can go through.
There are a variety of loans ranging from conventional and FHA loans, the latter that are secured with private lenders and also backed by the Federal Housing Administration (FHA) that presents its own selling obstacles.
There’s also a cash-out refinance or home equity loan, which may slow you down the most for a short sale according to David Stanger. That’s especially true if there’s another lender holding a second mortgage, as they will also have to approve the sale. The rules surrounding short sales and various mortgage types can also change from state to state.
Reasons for Possible Delays
One of the reasons you might inadvertently slow down the process is not having your paperwork in order to submit to the lender, says David Stanger. You’ll need to gather up information such as bank statements as well as drafting a hardship letter that explains why the sale is necessary.
Some buyers may get cold feet if the transaction takes a while, and possibly move on to another property — meaning you’re starting from scratch again, he notes. Of course, in this case the experience of the agent handing the short sale and knowledge of the process can also play a role in how long it will take to complete a sale, says David Stanger. An agent experienced in short sales can also help retain a qualified buyer if the process is taking longer than expected, he adds.
Short Sale Avoids Foreclosure
Regardless of the timeline for a short sale, the bottom line is that it makes more sense for a homeowner from a future credit perspective, explains David Stanger of Westmarq Real Estate Group. Initiating a short sale shows accountability and limits the damage from foreclosure, which could impact your ability to buy another home for up to seven years (three years for an FHA loan), he explains.
Depending on your lender, you may also be off the hook for the difference in what the home sells for and what you still owe on the mortgage, he concludes.
