Once the initial short sale criteria has been established, you should understand that there are many possible outcomes of the short sale. This is the most important thing to emphasize, there are NO guarantees. Both parties will do the best to get the short sale closed, but there are no guarantees that it will happen the way it was planned.
As the seller you must be motivated on this. You need to be committed to the process and the possible outcomes of the deal. You control your end of the process and if you are not serious about completing a short sale, it wastes many peoples time. Sellers that want to back out on their part of the deal especially when it comes to signing notes or bringing cash to the closing need to understand up front this may happen. If this is not of interest for them then a short sale may not be an option.
In this short sale business, this is a chance we all take in. Your attorney could draft an addendum to your counter offer to the buyer that indicates that if the seller does not agree with the terms the lender sets forth, the seller has an option not to close and that there will be no default on the seller’s end.
Most of the time, if there is a deficiency, it is still much better than a foreclosure deficiency.
The next thing you will have to do is have the estimates for qualification purposes only. There are certain expenses which the homeowners may not realize they have, so you will have to guide them so these things will be identified and considered. Child expense is one area that is always under reported. Parents don’t usually see their children as expense accounts, explore this area and ask questions pertaining to all child-related expenses including school fees, nannies, how much they spend on formulas and diapers, and other special treatments.
Most families do not monitor their monthly expenses on groceries. So in this case, suggest appropriate guidelines. Lenders would usually accept $800 per month for a family of four. You can use this guide and adjust it according to the size of the family.
Although having a baby is a blessing, one of the hardships that hit a family is supporting for that baby, especially if it comes out two in one delivery. Another childbearing-related hardship is having a high risk pregnancy and the mother should sacrifice employment. Include all baby-related cost like food, diapers, clothing, new car seats, cribs, and more. Sum up the expenses of having a new baby even if that baby is not born yet because when you get an offer and the short sale is approved, the baby would most probably be born. The usual cost of having an infant is $300 per month.
Weigh their total monthly expenses and their total monthly income. At some point, you may not need a calculator to do this. It may be very clear that their expenses exceed their income. Say a family of four nets a monthly income of $4000 a month, and their mortgage payment is $3000, then it is safe to conclude that they have a financial hardship. If their expenses reaches $8000 yet they only earn $7000, then that is an obvious financial hardship. In these cases, the homeowner would most likely qualify for the short sale.
A short sale is easier to get approved if there is a high difference in income and expenses. With this, you can tell its chances to get approved and how it will be approved. There are lenders who will remove their right to deficiency should the homeowner settle with a cash contribution or agree to take a part of the deficiency through promissory note which is offered at zero percent interest with low payments.
The lesser the difference in the deficiency, the less likely the lender will require the deficiency to be paid. But homeowners do not have control over their deficiencies most of the time. Florida is a deficiency state by statue. Lenders are given 5 years to exercise their right to the deficiency. However, I am increasingly able to get the lender waive their right to a deficiency.
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Call Stephanie Anson today at 352-260-0153 for a confidential phone interview regarding your options.
Please seek legal advice. This information is for informational purposes only.