Short sale companies present homeowners in bad situations with options. In most cases, homeowners who are behind on their payments or who are sorely underwater on their mortgages have two options: find the money or be foreclosed upon. The first option is oftentimes unrealistic; the second untenable. For that reason, many of them choose to pursue a short sale of their property. This is a complex process, however, and there are quite often more interested parties involved than the lender and the homeowner, which can present significant difficulties.
Short sale companies help homeowners to not be taken advantage of when they're in a tough spot. Many of the homeowners in those tough spots, of course, have already been taken advantage of by lenders, oftentimes by subprime lenders whose loans end up costing far more than the actual value of the property. Add to this the fact that home prices were often vastly inflated during the real estate bubble of the early 2000s and you end up with a lot of homeowners who are up against a wall with seemingly few options before them.
The short sale companies step in and start working with the lenders to arrange a sale of the property that allows the lender and the debtor more options than they may have had otherwise. The borrowers are generally facing foreclosure, which is devastating to credit ratings. It may also leave them even farther in debt, as there may be additional parties from whom they've borrowed money, such as the home equity line of credit lenders who did a brisk business based on those inflated home prices and a credit market that was far too easy. The short sale allows the homeowner to get out of the situation and the bank to avoid the costs of foreclosing.
Short sale companies will work with you to prepare the proper paperwork and to make sure that the banks understand their options. While you may feel that you're in a bad spot, the bank is in a bad spot, too. Foreclosures are very expensive for the lenders. They'll almost certainly take a loss on the sale price of the home and, of course, they'll lose the money they were counting on for the mortgage. This creates a situation where both the bank and the borrower are in a position where mutually-beneficial options are few and far between.
The short sale companies help the lender and the borrower to reach one of those mutually-beneficial arrangements. In this case, the lender allows the sale of the home for less than the total of the remaining mortgage. In some cases, the remainder of the mortgage, called the deficiency, may be forgiven, sometimes not. Working with one of these companies, however, makes it much easier to come to one of these arrangements. Because they're not personally involved, they're able to be more objective and to seek out an arrangement with the lender that is acceptable to them and the homeowner.
If you have any questions, please feel free to contact me through my website at http://www.GoldenStateRealEstate.com or by phone at (805) 520-0525. Comments and feedback through this site are also very much appreciated!
Sean Crosier
Broker/Owner
Golden State Real Estate
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