In today’s housing market, more and more Sellers who are financially strapped have given up hope of selling their home and making any profit or just being able to cover their mortgage payoff.

So…what’s the next step?

A “Short Sale” in Alpharetta sounds so simple, but don’t be deceived, it is neither a simple or short process. If or when a Lender considers a short sale in Alpharetta, the Seller has usually missed several payments. Contact with the Lender is paramount at this point. In order for the Lender to consider a short sale the Seller must be able to prove a real hardship situation to have any of the debt forgiven, such as, loss of job, divorce, a disability, death of spouse and no financial means to continue making payments on the loan. If you have money in Savings or a 401K, the Lender expects you to use that money to keep current on your loan. They will also require verification of income along with tax returns, and listing history information on the property.

For clarity, here is an example of a short sale in Alpharetta: Let’s assume the Seller owes $250,000 on the mortgage loan and has received a Buyer offer for $225,000. If the Lender will consider the “short sale”, he may forgive the remaining debt of $25,000. Any past due payments would also be forgiven.

The Alpharetta short sale process differs from Foreclosure because the Seller, not the lender, sells the home, but obviously the Seller receives no proceeds from the sale. Your credit is not harmed as much with the short sale as it is with a foreclosure.

The Lenders role in this scenario is a “learn as you go process”. They have not been in the
business of taking payment for less than the full amount and are not accustom or prepared to handle the onslaught of so many loan defaults. Most are short staffed in experienced and
knowledgeable employees, so the system bogs down. Some Alpharetta short sales may take 5 to 6 months to be approved. All too often, after a long wait, the short sale is denied.

What goes wrong with a short sale in Alpharetta?

1. In most cases the Seller has a first and a second loan on the property. The Lender holding the second wants to re-coop some of their loss and may not agree with the terms of the sale.
2. Most often it is the Buyer that causes the deal to fall through. When the Lenders drag their feet the Buyer gets tired of waiting for the deal to close and moves on to another property.
3. Lenders may change their mind right before closing and nix the deal or make unreasonable request of the Seller or Buyer of the short sale.
4. An increase in interest rates during this lengthy process may cause the Buyer not to qualify for the loan.
5. A short sale versus a foreclosure is the Lenders choice, not the Sellers. Although Lenders loose more money on a foreclosure, sometimes they can re-coop some of their losses from PMI (Private Mortgage Insurance), therefore in these instances, the Lender may choose to foreclose and will not consider the short sale option.
6. The Sellers Listing Agent may not have the experience in Alpharetta short sales to council his/her Sellers on the process and the technical aspects which evolve from this type of situation.

Key steps to working with your Lender in short sale situation:

1. Contact your Lender when you first realize that you can no longer make your payments.
2. Explain your situation in writing and mail it to the Lender “Receipt Requested”, so that you can document your due diligence.
3. Send a copy of any documentation that justifies your request along with your letter.
4. Promptly respond to correspondence from your Lender. They can provide you with valuable information about your options. This also shows the Lender that you are genuinely trying to make things work out. The first bit of information will discuss ways to avoid foreclosure. The latter correspondence will regard notices of pending Foreclosure.
5. Use your assets to make your payments. Discontinue lawn, cable and other services and memberships. Show your Lender that you are willing to make sacrifices to save your home.
6. Dig out your mortgage loan documents and read them. This will help you know more about the Lenders options. Be prepared!
7. Educate yourself about the foreclosure laws and time frames in your state. Many states have different processes for short sales.
8. Beware of companies claiming they can help you prevent foreclosure. Their fees can be as much or more than three of your loan payments. Do not sign any document allowing them to intervene on your behalf. You could be signing away your home!
9. Lastly, hire a real estate professional to represent you who has experience and knowledge of Alpharetta short sales and foreclosures. Their assistance and advice will help smooth out a difficult and trying situation.