This happens when a homeowner owes more money to banks and/or lien holders than what the property is currently worth. In order to sell a property that is “upside down” in equity, the bank must agree to accept less than what is currently owed on the property.
So there are two parts to a real estate short sale:
1. Sell the house much like you would any other house.
2. Get the lender to approve the sale.
Recent changes and how they can help you or a friend…
Some banks such as Wells Fargo, Wachovia and World Savings saw a need to make it easier for people to get out from under their high mortgages. They developed a “Fast Track” system where you do not have to be behind in payments (big change). They quickly approve your sale and can close in 45 days or less (also big change). Investment properties and Properties with junior liens qualify. You do not need to destroy your credit. You may be able to obtain another mortgage as early as two years after closing on your short sale.
A recent success story
For one of my clients, I not only negotiated her “short pay” on the loan, but also got her Homeowners Association dues which included a $2000 assessment and attorney fees PAID IN FULL, First loan PAID IN FULL, Franchise Tax Board lien PAID IN FULL and IRS lien moved off the property. This client was a year and nine months behind in all payments. Lucy said, “Our client has much less stress now so it was worth all of the hard work.” The seller did not have to contribute any funds; not even a penny.