Selling a short sale in San Diego -
Assuming that you have already approached your lender and asked for a “workout”, forgiveness of a portion of the principal and or a rate adjustment and got a resounding NO, one of the remaining choices to consider would be negotiating with the lender to sell “short” i.e. the homeowner puts their home on the market for sale for less that what is owed to the Bank.
There are provisos to selling “short”, you must have substantial reason, not every seller will qualify. You will need to actually prove that home values have dropped, you are suffering hardship (you can’t afford the payments) with lots of documentation or be relocating to another city. Other reasons may include unemployment, divorce, medical emergency/sudden illness, bankruptcy or death. Not every lender will consider a short sale, but it’s worth a try …
One issue to bear in mind is the status of your loan(s). Original purchase money loans are considered “non-recourse” (both first and seconds) and technically lenders have to forgive their losses if you have their approval to sell short. If you refinanced after your purchase, loans are considered “recourse” and lenders can chase you into bankruptcy to collect. You should consult a real estate lawyer and a tax accountant to determine any tax or other consequenses and whether you can afford to pay those taxes or mortgage balances, if any.
Your credit report may show details of a short sale depending on how your lender reports the loss to the credit agencies and it will more than likely affect your credit score. Although selling short may affect your credit, it’s generally accepted that it is not as bad as a foreclosure and definitely not as bad as just handing back the keys (walking away) that some so called experts may reccomend.
There are many agents that claim to know how to deal with lenders during the short sale process but not that many are practiced in the art of getting all the required pieces together to make it happen. The paperwork “package” that needs to be submitted to the Lender(s) is very extensive and most Lenders will not even look at your request without an offer from a buyer.
If you need help or advice please check us out we are experienced San Diego Realtors and have the know how to answer your questions!
» Posted by Peter 
