Following some legislative changes, successfully navigating a Santa Barbara short sale has become a little easier, but is still a transaction that takes care and vigilance. A short sale -- the arrangement between seller and mortgage lender that allows the seller to sell the property for less than what is owed – can be quite involved. It requires negotiation directly with the lender, and contractual arrangements that can carry over into the future. If you are considering short selling your house, or simply want to know more about what it would entail, these are a few pointers to bear in mind:
Seek Financial Advice
A short sale is not always the best solution.One alternative, for instance, may simply include opening a discussion with the lender to see if a revised payment plan would allow you to continue residence. On the other hand, if the financial situation precludes less stringent measures, a short sale may save you from declaring bankruptcy by causing in the remainder of the debt to be forgiven. The Mortgage Forgiveness Debt Relief Act can relieve a short seller from some or all of the taxes otherwise due from the gain realized through such forgiveness – but that’s not certain (and another reason to consult a financial expert). Even with a short sale, you may still end up owing the lender quite a bit of money. Speaking with a financial advisor and understanding your potential financial liability is absolutely key before committing to a short sale.
Choose an Experienced Short Sale Agent
Every bank is different, and so is every short sale transaction. Hiring an experienced agent to list your home – one who has successfully closed previous short sales -- will help arm you with the guidance you and the buyer will need to successfully complete the sale. Don’t hesitate to ask any potential agent how many sales he or she has actually guided to completion.
Be Patient, But Proactive!
Once the lender has approved a short sale, marketing can begin. However, you must be prepared to wait. Every decision that you and your buyer make has to be approved by the lender. This takes time – as much as 4-6 months or more. It can be maddening, but it’s not uncommon to lose several offers along the way. Whatever you do, do not stop paying your taxes or HOA fees if applicable. Keep in mind that short sales are all about cash: if you have waited 6 months to get approval from your bank, and your buyer finds out at the last minute that you owe hundreds (or thousands) to other entities tied to the property, that buyer may balk – putting you back to Square One!