A short sale in Charlotte, NC, is a better option than a foreclosure. This type of real estate deal often involves homeowners in profound financial struggles. Since they can no longer meet up with their mortgage payments, they can get some relief by putting up their homes for a short sale.
There are several myths about short sales in Charlotte, NC, like time requirements can easily discourage a buyer, to name one. The short sale process is a complicated one, so the public has several misconceptions about it. Unlike regular property deals, a short sale can take anywhere from a month to a year to complete.
Tons of paperwork has to be done before the lender can approve the seller for the transaction. Additionally, the lender can even reject a buyer’s offer even after approving the seller. Read on to learn more about short sales and the 9 biggest myths of it.
What Is a Short Sale in Real Estate?
A short sale in real estate is when a financial lender agrees to let a borrower sell their home for less than what is owed on the mortgage. It can be an ideal situation for the buyer while putting the original seller at a loss. Still, it’s the most beneficial way to sell a home during a financial crisis.
The money realized from the sale goes to the lender. Then the lender will decide whether to forfeit the remaining balance. They may choose instead to recover a part of it through a deficiency judgment. However, this action is not always in their control to execute. It depends on the State Laws on deficiency judgments.
Some states generally approve lenders to seek deficiency judgments against the borrower. However, others don’t. Nevertheless, the law governing this procedure is flexible. It is sensitive to certain conditions, including the mortgage agreement.
When Does a Home Go Into a Short Sale?
A short sale comes into play when a homeowner cannot meet the financial requirements of a mortgage. Instead of sitting back with no strategic move, the homeowner applies for a short sale. An approval means that the borrower and lender have agreed on a non-profitable deal under special circumstances. For example, the resident and the lender have to agree on a price value for the asset to be sold.
Typically, the lender will only agree to a short sale if the borrower is facing financial struggles. They may review the borrower’s credit score. Or they may check their bank statement to verify their financial condition before approving the short sale.
However, before a property can enter into a short sale, the lender will also require that the home cost less than the seller’s worth.
Why Make a Short Sale in Charlotte, NC?
Short sales in Charlotte, NC set the path right when an individual’s finances go south and mortgage payments accumulate. Even though the seller won’t profit from the short sale, the deal can free them from their mortgage debt.
Moreover, it will result in less damage to their credit than a foreclosure. A short sale helps sellers avoid the shame, sadness, and stigma that comes with a forceful eviction from their home.
People who experience foreclosures might languish from the fallout for several years. For example, they will be unable to purchase a home for another seven years.
Top 9 Short Sale Myths in Charlotte, NC
Charlotte, NC, short sales are becoming more popular by the day. If you’re considering applying for a short sale, you should seek the correct answers instead of worrying about any myths. Here are nine short sale myths that are common to homeowners.
1. Buyers Disregard Short Sales
This is a popular short sale myth that you’ve likely heard. However, the reality is quite the opposite. Perhaps you have faced rejection and received appalling offers in the past. But for every buyer who rejects your short sale home, there are two more interested buyers.
Some buyers love the idea of a short sale. Investors who specialize in this type of deal will gladly buy a short sale home. Many buyers in the real estate market are actively seeking short sale deals.
If you work with a reputable real estate group, finding a buyer shouldn’t be a problem. Also, the internet has more than enough reach to find you interested buyers. List your home on multiple platforms, and see how buyers flock around the deal.
2. Short Sales Don’t Get Approved
If short sales don’t get approved, why are they still common? Why do homeowners take the time to apply for a short sale? And why do people prefer it to a foreclosure? These are questions to ask whenever you get doubtful about getting a short sale approval. Although the process can be sluggish, homeowners do get approvals on short sales.
One of the best ways to speed up the process is to work with the right team. Many sellers have failed to secure a fair deal in the past because they didn’t use professional help. So if you want to make a short sale without going down the wrong path, you should work with an experienced team.
An experienced short sale team will guide you through the application process until you reach a final agreement. Then they help you execute the short sale quickly and move on with life.
3. It’s Too Late For You To Apply
If you fall far enough behind in your mortgage payments to attract a foreclosure, it’s easy to feel under pressure. You may think you have waited too long to apply for a short sale. Still, if you begin the process today, it might not be too late. You just have to do it right.
Good short sale experts always have legal assistance to push the foreclosure date out and gain the bank’s cooperation. When you include such experts in your short sale procedure, you’ll be able to create enough time to take the burden off your credit.
You can act now. Never feel there is no time for negotiation. Most lenders wait until the last auction day before initiating a foreclosure. Act now, and you should be able to get your short sale approved.
4. The Bank Won’t Offer a Loan Modification
Everyone applying for a short sale needs to call their bank at one point. When this happens, the bank will come through with a loan modification as an alternative to a short sale. Even if they know the process won’t apply, they’ll still approach you with one.
This part seems confusing to the majority of homeowners going down the short sale path. They are not comfortable with loan modifications, whereas the bank is just performing its duty. If the borrower is facing minor financial trouble, they can opt for a loan modification. It will lower the interest rate and extend the term of the loan.
However, banks will not process a loan modification and a short sale simultaneously. So if you choose to proceed with a short sale, the bank will close out loan modifications on your account.
5. The CARES Act Will Stop The Bank From Foreclosing on My Property
The CARES Act seems to have absorbed the impact of Covid-19 for many homeowners. Unfortunately, some homeowners receive false information about the Act’s provisions. The CARES Act can’t stop your lender from initiating the auction on your property.
It can only halt your monthly mortgage dues for up to one year. Then it can restrict your lender from imposing late fees or negative credit reporting for utilities. However, the Act makes no restrictions on how your lender can recover the missed monthly payments after the forbearance. This means you need to make timely inquiries about payments.
Lenders don’t stop their auction process, even if the bank stays mute about it for years. You may not be able to do anything about it at the last minute. So don’t wait until the bank sends you a message. You may be at risk of foreclosure.
6. Short Sales Won’t Work if There Are Other Properties And Assets in Your Name
Many people have been alarmed by such information in the past. As a result, they forgo attempting a short sale while letting a foreclosure eat up their credit. What if you found out that most homeowners making a short sale also have other assets? The majority of them have other properties, and nobody will penalize you for holding one.
The lender’s willingness to give up the difference is what makes a short sale possible. When you miss a payment or realize you can’t keep up, prioritize seeking the lender’s pardon. It would help if you tendered suitable conditions alongside proof of financial struggle. It will likely help you to obtain timely consideration.
Lenders can’t tamper with your IRA, or 401K retired accounts. In some cases, you may not be required to contribute to the deficiency.
7. Banks Prefer Foreclosure to Short Sales
This statement is a controversial opinion. The truth is, banks never want a foreclosure because short sales bring them more money.
Distressed assets cause huge disruption on their record. After foreclosure, the bank is unlikely to get more value from the sale of the property than what a short sale brings to the table.
Anyone telling you that the bank won’t offer approval is probably inexperienced with short sales. Collection agents working for lenders often say this too. That’s why it’s best if you get your facts right. Resolving a bad debt through a short sale is far better than a foreclosure.
8. There Must Be Valid Proof of Financial Hardship Regarding Your Mortgage
You can’t just hop into a short sale agreement without following due process. It’s true that most lenders only commence short sale proceedings if you have missed a payment. However, you can make a short sale anytime.
The common belief out there is that getting approval is impossible until you miss a payment. Well, not quite. Nowadays, lenders want valid proof of a disruptive influx of monthly cash flow, pending or monthly shortfall. Once they notice that you can’t pay your next mortgage, they will likely qualify you for a short sale. After all, they gain in the long run, and you only incur a little loss.
If you can’t pay your next mortgage, you can apply for a short sale immediately. Don’t wait until a foreclosure before you make a move. That’s a common mistake most homeowners make. Ensure you hire a professional team, prepare your credentials, and file for an application immediately.
9. Making a Short Sale Comes With an Embarrassment
You’re not the first person to run out of cash flow, and you won’t be the last. Anyone can fall into financial trouble, so short sales are understandable. But you can hardly say the same about foreclosures. Being forced out of your home can cause stigma, disappointment, and even depression. Not to mention, it will often lead to an appalling credit score, compared to if you had made a short sale.
Imagine walking into an interview with a foreclosure recorded in your credit. Your records will hold that the bank foreclosed on your home. And potential employers will find it disturbing.
Listing your home as a short sale may not be an easy decision for you due to the mortgage’s present worth. But it’s far better than being forced out of your home.
Is a Short Sale Bad for the Buyer?
A short sale is often more profitable for the patient buyer. This is because the seller in financial distress will always sell the house at a reduced price.
On the minus side, the buyer is likely to find the property in a state of poor maintenance. Such a condition is typical since the seller is unable to sponsor renovations before the sale.
Can Short Sales Be Quick?
Short sales can be tiresome, especially because of approvals. But they can work faster with some professional help.
Normally the seller will hire a short sale agent to process the transaction, so buyers don’t have to worry about this expense.
The short sale specialist has to provide all the lender-required information upfront. Some legal procedures will also help them to work through the bureaucratic processes that cause delays. Hiring an expert like this is a more efficient route to a short sale than going solo.
A Charlotte NC short sale agent realtor is all you need to execute a short sale and gain maximum comfort. Experts at Nancy Braun Real estate are ready to help you apply to your lender. Then they can market your home and help you avoid foreclosure.
Nancy Braun is a real estate expert with over ten years of professional experience. She runs her real estate firm with creativity and innovation to help buyers of real estate. So far, Showcase Realty is behind thousands of top-dollar sales in Charlotte, NC. Sell your home with a smile on your face; contact the experts today at 704-997-3794.