How Can I Sell A House With
No Equity?
Frequently Asked
Questions
For Homeowners
What is a pre-foreclosure sale?
A pre-foreclosure sale (commonly
referred to as a “Short Sale”) allows you to avoid
foreclosure by selling the house for a price less than the
amount necessary to pay off the mortgage loan and closing
costs. This creates enough equity so commissions and
closing costs can be paid by the bank and not you! You are
still the seller but the lien-holders must approve the
reduced debt payoff. We can get you out of a house where
you owe more than the house is worth.
You may qualify if:
- the loan is at least 2 months
delinquent
- you are able to sell the house
within 3 to 5 months; and
- a new appraisal (the lender will
order and pay for it) shows that the value of the
property meets lender guidelines.
Why do you need our Pre-foreclosure
Sale Program?
You need this if you want to avoid both
a foreclosure and deficiency judgments that will seriously
affect your ability to qualify for credit in the future. We
can help you even if you have a high principal balance when
compared to the value of the house. Traditionally, if you
owe more than the house is worth, closing costs and
commissions would have to come out of your pocket. Most
homeowners try to list the house above market value and hope
for the best. Usually if you are behind on payments you
won’t have the funds available to close. A
pre-foreclosure sale done correctly will cost you nothing.
Attorney costs, commissions and forgiven debt are taken from
the bank’s discount.
How will you benefit?
You can avoid foreclosure, minimize
the damage to your credit, walk away without a deficiency
judgment, and possibly get paid for participating in the
program! A high listing price and extended days on the
market will only make this situation worse. To help save
your credit and stop a foreclosure you need to act early.
You can concurrently process a refinance, forbearance, loan
modification or list it for an unrealistic price. The short
sale process can take a while so you may as well start
early. If another plan unfolds, it didn’t cost anything to
think defensively. If you let this go to a foreclosure
auction, the bank can process a deficiency judgment for
money they lost in the foreclosure. In a properly
negotiated pre-foreclosure sale, the bank usually gives up
their right to collect for damages.
How will the bank benefit?
They know the house is headed for
foreclosure. Nationally, this costs them an average of
$36,000 in lost interest, attorney fees, taxes, insurance,
repairs, marketing commissions and eviction costs per
house. If they can dispose of the property before a
foreclosure with a controlled loss in a few months it saves
them money in the long run. Many banks know they made bad
loans with inflated appraisals. They are willing to make up
for it now. They need to feel some pain before allowing a
loss which is why the payments must be delinquent.
What is the procedure from here?
Call me to make sure the house fits the
criteria for a pre-foreclosure sale. You will sign an
Authorization to Release Information
to allow my staff to
negotiate with the lender or other lien holder. We will need
the following from you:
·
two years of most recent tax returns,
·
two months of pay stubs,
·
two months of bank statements,
·
write a hardship letter,
·
fill in a financial worksheet
·
bank specific paperwork.
My team will
submit the package with purchase contract, HUD-1 and a
letter explaining the situation. The bank will send their
specific paperwork requirements and schedule an appraisal.
I will accompany the appraiser. This is the most critical
event and must not be taken lightly. This is why I must be
involved directly. If it comes in too high, the house will
go to foreclosure. You want the appraisal to be as low as
possible! Once the bank approves the sale, they generally
want to close in three weeks or less. There may be a need
for additional paperwork after the bank approves the sale.
What will this cost me?
Zero. The bank is taking a
reduction in their payoff so commissions and closing costs
can be paid without any money from you. Essentially, the
bank and the buyer are paying for your closing costs,
attorney fees and realtor commissions.
What is the benefit of using our
company?
The risk of listing a foreclosure
property at high value without ever being able to close
prior to auction is high. We work hard to create a solution
that benefits everyone. You avoid foreclosure, the bank
loses less money than at auction, and we buy a house for our
buyer. We can even help your realtor get commissions if the
house is listed now. Our specialty is bank
negotiations. Pre-foreclosure sales are time intensive and
require special knowledge and systems.
Are you an accredited debt
counselor?
We are not debt counselors. Our job is
to process the short sale and negotiate a debt settlement;
once you have determined the need to sell. Please contact
consumer credit counseling services for an in-depth
personalized debt review.
