Guide to Short Sales in Ann Arbor

Definition and Process

The term “short sale” in real estate, is defined as a house which is up for sale, but at a lower price than the amount remaining on the mortgage. Short sale homeowner’s are usually in a financial strait situation, such as a major illness, job loss, or a divorce. Short sale homeowners, now must sell their homes, for far less than their mortgage amounts. A short sale is the better option than filing or going into foreclosure. Owners continue to own a house that is being sold as a short sale, unlike a foreclosure, where the lender or the bank becomes the owner.

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Short Sales in Ann Arbor

Yes, a short sale is a negative for a homeowner’s credit, because it can appear on your Michigan credit report, as a pre-foreclosure transaction. If there is an advantage to a short sale vs. a foreclosure, it is that the homeowner is still in control of a sale and not a lender, but the sale proceeds go to the bank or lender. The laws in Ann Arbor, Michigan, supports the homeowner’s short sale process. The state of Michigan also encourages lenders and banks to work with indebted homeowner’s rather than go into foreclosure, which is not good for the real estate market in Ann Arbor.

Short Sale Support

The average Ann Arbor short sale closing time frame, is between 60 and 120 days, especially, when homeowners sign up for the federal Home Affordable Foreclosure Alternatives (“HAFA”) program. Under the HAFA program, short sale homeowners receive immediate feedback from bank lenders, even before they place their home on the market. When seller’s apply for a short sale, it is up to an Ann Arbor lender to approve their borrowers application. The Michigan HAFA rules, encourage lenders to free borrowers from repaying the monetary difference between the short sales price and the remaining loan amount, with no financial judgments against them.

Short Sale Closing

A benefit of the Ann Arbor HAFA program is in the closing transactions, where short sale homeowner’s can possibly receive $3,000 in moving assistance, because seller’s can not remain in the house. An Ann Arbor real estate short sale closings, includes the buyer, the seller, and the seller’s bank or lender representative. At the closing, the difference between a short sale and a standard realty closing, is that a lender pays the seller’s closing costs and not necessarily the buyer’s. However, short sale buyers can negotiate for some partial payment of their closing costs.

Solving Your Mortgage Crisis Just Got Easier in Ann Arbor Area

Solving Your Mortgage Crisis Just Got Easier

5 Steps for a Successful Short Sale in Washtenaw County

Lenders and the federal government, prompted by the sheer volume of loan modification and short sale requests, have overhauled their systems and programs, making the foreclosure avoidance process much easier than in the past.

If you are considering short selling your home to avoid the financial and emotional fallout of foreclosure, you should be aware of the five steps you should take to increase your chances of a successful transaction.

First, do you qualify?

You must:

  1. Have a verifiable hardship, like unemployment, medical bills, or relocation
  2. Must have a monthly income shortfall
  3. Be insolvent (you have no cash or assets that can be sold to pay down the mortgage), or headed towards insolvency

If you meet these qualifications, follow these five steps to a successful short sale:

  1. Contact me so we can identify your servicer, fill out a short sale packet for the lender, and assemble all the required information needed to list your home for sale
  2. Gather financial information (i.e., bank statements, pay stubs) from at least the last three months
  3. Keep your house in showcase condition for showings, and make as many repairs as necessary and that you can afford
  4. Expect the lender, junior lien holders, and private insurance companies to request more paperwork, and try to gather requested information quickly to ensure transaction efficiency
  5. Set realistic expectations and work with me, the lender, and the buyer to the satisfaction and benefit of all parties involved

For more information about how the short sale process works, or about any other foreclosure alternatives you may qualify for, call me today.  Kathy Toth and Team can help you alleviate the burden that the threat of foreclosure brings, and we can develop a strategy to help you breathe a little easier.