Nobody knows what a Short Sale is????

Question

What is a house short sale Exactly? I posted this already and got one uninformative answer. I need to know this before we make expensive mistakes!

My brother ownes a home that is in very bad disrepair. the tenant now has put her rent into escrow. Since the tenant did that, my brother cannot afford to make the payments on the house. And he dont have the money to do all the repairs.

We are thinking of doing a "short sale" on the house but we are not sure exactly what that is? My brother also owns a home in Columbus OH that he does not want to loose.

Is this correct? The bank sells the house for penny's on the dollar and then comes after you for the balance?

Please someone with experience and good advise respond to this. He is having big problems.

On my last post: I got a reply of: Your brother is in trouble. He cant do a short sale.
I replied to him with:
HUH? ZEUZ? What kind of answer is that? I see your a top contributor but that was not very informative. My question was. What is a short sale. What are the details.
You did not give me anything to educate myself about a short sale. Maybe your right, but you didn't offer any suggestions?

There has to be something we can do.

I chat with a short sale company. Here is the link to that chat. Not enough room to post it here. Tell me what you think of that?

http://www.angelesads.com/chat.htm

Anybody want to jump in on that chat. Copy/paste it and give your comments.
I do need to know what a short sale is. follow that link in my last edit and copy/paste it into a doc, Add your 2 cents and then email to me at;
[e-mail]

PLEASE!!!!!!!!!!!

Answer 1

A short sale is when a seller owes more on the home than it's worth, and the bank agrees to take an amount less than what's owed and the difference is forgiven. If there is a second mortgage or other lien on the property, the other people who are owed money can refuse to accept the terms of a short sale, even if the first mortgage holder is willing to accept it.



One condition of a short sale is that the seller must have some kind of hardship, which would be something like the loss of a job, a divorce, or a death in the family. And, "I owe more on the house than what it's worth" is not a hardship that would qualify you for a short sale.



The first step in getting a short sale approved is to contact the lender and ask if you can apply for one. At this point, they will send out a package of paperwork called the hardship package. This is where you fill out all the documentation to prove how your hardship makes it impossible or difficult for you to continue making payments on the house.



You may want to contact a real estate agent who's experienced in short sales to help you with this, with the agreement that this agent will represent you in the sale. But, one mistake inexperienced agents make with short sales is to list the property for sale before getting the short sale approved at a certain price. They just put the house on the market and see what kinds of offers thay get. A notice in the listing says that acceptance of all offers are subject to lender approval. So, they take the offers to the lender to show how much the property can sell for on the market and how much less that is than the amount owed.



So, you end up with a number of people who have put an offer in all waiting up to several months for the short sale to be approved (if it is at all). And, the lender may even say that none of the offers is good enough, and they will require the seller to reject all offers and re-list the property at a higher price. They then sit around and wait for higher offers to come in. I've seen short sale properties on the market for over a year. The lender will wait for their price, as long as the seller is still making payments.



But, some lenders actually require the seller to go into default (stop paying the monthly payments), so they can begin foreclosure proceedings, That way, if the house doesn't sell as a short sale right away, the lender can foreclose instead. That way they can get that bad debt off their books as soon as possible.

Answer 2

First. Who set the asking price? the owner, or the bank? If the owner was loosing the house and set an asking price much lower than the bank, then the bank made a counter offer. Yes in a short sale the bank looses, and many times will go back to the seller to recover the losses. Before your Realtor complains to the board, he should get all the answers. Short sales are always bank controlled, and they don't work on any ones time schedule but there own.

Answer 3

A short sale is when the seller will not have enough money to pay off mortgage at closing. Lender approval is needed for this and lender will waive remaining balance. If lender agrees they will not come after him for any more money after the closing.



Lenders require that most assets be liquidated before this occurs so the other home in Columbus may be a problem. Your brother needs to be virtually bankrupt in order for lender to agree to this.



He needs to call lender to ask them if they will consider a short sale. if they will then list home for sale. Once he receives an offer he sends it to lender for approval.

Answer 4

Those answers you have are all good at describing the short sale process.



One thing that mortgage companies look for is possible fraud going on. They would not allow your brother to sell the house to you on a short sale- because they would suspect that you and he are trying to defraud them.

Answer 5

It means that the bank is allowing you to sale the house for less than is financed, and you have to have the banks approval before you can do it. Its not something you just up and choose to do, its a last resort for the bank. But my question is why did the tenant start putting rent into escrow? If your brother didnt approve then they cant decide to on their own, he needs to get new tenants if that action is going to cause him to loose the house.

Answer 6

The house gets sold for less than you owe, and you ARE NOT responsible for the balance. But you have to pay takes on the amount that's forgiven, and it does affect your credit. Not as badly as a foreclosure, but it does affect your credit.

Answer 7

my peers gave you the answer re the short sale; I emailed you

privately re how you got where you are and some options for you to cure your situation.