I met a Realtor a few weeks ago at a distressed property in Long Island, NY and we began chatting about the real estate market here in Long Island. She told me that she handles “lots” of short sales in both Nassau and Suffolk County. Then she commented that the expression short sale doesn’t work anymore, because it used to take a “short” amount of time to close them and now it doesn’t and that’s what the term “used” to mean. That could not be more wrong.
I speak with Long Island homeowners and real estate professionals on a daily basis and I am often surprised on the misinformation that homeowners are told by some of these “professionals”. I have found that a lot of false and inaccurate information is floating around Long Island and in New York, in the area of Short Sales and the Short Sale process. I could literally right a hundred blogs to help explain short sales and the whole process and maybe I will someday. The intent of this blog is to just define in simple terms what a short sale is and why you should consider using a short sale when your home is in default or as its sometimes know “pre-foreclosure”
A short sale simply and literally means the sale of a home where the proceeds from the sale fall “short” of the total balance owed to banks, mortgage companies and other parties who might have a lien against the property (first mortgages, HELOC’s, judgements, unpaid property taxes, etc).
Homeowners in Long Island, NY should consider a short sale, when they are “underwater” on their homes. The terms underwater or upside down, means that the homeowner owes more on their property (total of mortgages and other liens) than the current market value of their homes, if they tried to sell it. Since their is not enough money to pay off all the liens on the property, it cannot be sold and eventually the bank or mortgage company will move to foreclose on the homeowner.
With a Short Sale, the homeowner is agreeing to cooperate with the mortgage lender and request permission to sell the house for less than what is owed on the property. If a Short Sale is approved, the bank is agreeing to take less than what is owed to allow the house to be sold with a clear title. While nobody “wins” in this situation, it is almost always a better outcome for the homeowner and the mortgage lender when a short sale occurs, rather than a mortgage lender foreclosing on the property. If a short sale is done right and the bank agrees, then the homeowner would never be responsible for the “shortage” between what the house is sold for and what the bank accepted as full payment of the loan. This is known as a deficiency balance and here in Long Island is rarely less than $100,000 by the time a home is foreclosed upon.
While it may sound simple and straightforward, the short sale process is not something that a homeowner or inexperienced Realtor should attempt, especially in a place like Long Island, NY or anywhere in New York State. Generally, you will have only one shot at a getting a short sale approved. It’s better left to the professionals. Oh, and here is the best part. The mortgage lender who approves the short will pay all the fees and expenses related to closing the deal! In many cases, the bank may approve some relocation funds (if you qualify) to hep you get a fresh start!
If you are interested in learning more about how to stop foreclosure on your home or about the short sale process, please pick up the phone and give us a call at 516-704-7025 and we would be glad to give you a no cost no obligation consultation. OR fill out our short information form below or on the side and we will get back to you immediately.