The Down Side of being Upside Down: Short Sales
Erwin Wurm: House Attack, 2006.
Outdoor sculpture at the Museum Moderner Kunst (MuMoK) in Vienna
Our local real estate market has not been immune to the problems experienced around the country. We are fortunate that our local economics have been strong: the manufacturing, service, biotech and computer industries have kept unemployement low and productivity high; nevertheless, there are a great many home owers who are “upside down” in their mortgages. This means they owe more than the property is worth; they are behind on their payments and, essentially they have no assets. In order to avoid foreclosure, one option is to short sell the property.
Short sale - negotiating with lien holders a payoff for less than what they are owed. You put your house on the market, accept an offer, submit the offer to the lien holder/s, and pray that they allow the sale to go through at a loss.
Sounds easy, but I warn you, executing a short sale is a far more difficult process than simply asking the bank to let you off the hook. If you, your friends, colleagues or family are having difficulty making your payments and face a foreclosure, allow me to make the following recommendations:
1) Consult your attorney and CPA to discuss your options. There can be serious legal and financial consequences connected with this process.
2) If you proceed with the short sale of your home, make sure your agent has experience with this process as it is not for the weak of heart. Your agent will be required to prepare an extensive package for the lien holder/s, negotiate an acceptable price with the lienholders and then follow the transaction to closing. It has been taking, on average, 2-3 months to complete a short sale.
3) Be prepared to provide your agent and the lienholders with the following: a hardship letter, two years full tax returns, your last two pay stubs, two months bank statements, notarized authorization that your agent can talk with the lien holder/s, financial statements and bank statements. Your file is going to be scrutinized closely so be prepared!
Finally, the most important thing to remember is that there is help out there. Don’t let your financial situation become so bad that you can’t get out: ASK FOR HELP! You’d be surprised how many resources and people there are willing to give you a hand.
