Fairfield County Real Estate News: How much will a short sale cost you?

How much will a short sale cost you?

How much will a short sale cost me?How much will a short sale cost you once you close your home?  Well, it depends on your specific circumstance, which we'll discuss in detail below.  One thing I know for sure is the real estate agent you choose to represent you is very important. Since your agent will be presenting offers to your bank and negotiating a settlement with your bank, it's important to choose an agent that's well versed in negotiating your best interests.  When you work with the Braunagel team, our goal is to close your loan with you owing nothing AND in most cases, put cash in your pocket to help you with your moving expenses.  If this sounds good to you, read on and learn more...

Who pays the attorney representing you?  This depends entirely on the relationship you have with an attorney and how they bill.  Some attorneys charge a retainers fee up front, others collect a small fee up front and the rest at closing and still others collect 100% of their fees at closing.  When you work with us, you won't pay a dime out of your pocket for your attorney.  The proceeds from the buyers offer pays for your attorney.  We have arrangements with attorneys and do so much work with them that they only get paid if we reach our goal to sell your house.  Collectively, we're all fighting for the same result with your best interest in mind and no one gets paid until we sell your house.

Who pays the realtor's commission for selling your house?  This expense is also covered by the proceeds of the buyers offer.  The expenses of the attorney and the real estate agent's commission in addition to other closing costs reduce the money your bank gets from the sale of the house before their net payment is calculated.  Operating this way, our fees come out of the transaction, not your pocket!

Who pays the deficiency to the bank after the bank collects less than you owe?  By definition of a short sale, banks do get less than what you owe.  Banks don't have to accept a short sale, but the alternative is usually worse... that being a foreclosure whereby the bank incurs legal expenses, holding costs, eviction costs and more only to turn around and sell the home themselves for less money in a depressed market.  Banks are keeping more money by negotiating a short sale than by a foreclosure sale.  For that reason, they are willing to negotiate the deficiency away and write off the difference as a loss.  In most cases, the Braunagel Team is able negotiate away the entire deficiency with your bank for both first and second mortgages.

What if you have liens on the home from an old roof repair that was done and never paid for or a tax lien was put on your house for taxes you didn't pay?  Who pays for them?  A lien, just like a mortgage on your home is a claim in the equity you have in your home.  If you owe someone money and they put a lien on your home, you have to satisfy that debt before you can sell your home.  A lien is recorded on the title to  your home and MUST be lifted before you can sell it.  That means that you'll need to reach an agreement with your lien holders to satisfy the debt in exchange for lifting the lien.  There's no other way around that.  If it's money you owe anyway, it has to be settled before you sell.  You simply can not transfer title with a lien still on it.  You have to pass clear title in order to sell your home.  The Braunagel team has helped negotiate different liens, including tax liens for our clients resulting in clear title to move forward with a sale.  This is one expense you'll have to settle up on and in many cases, the debt can be negotiated lower.  If you don't have any of these types of liens on your home, no worries... read on.

What if you have a home equity line of credit (HELOC) outstanding?  Who pays for that?  If you have one, these get a little more complex.  They get complex because you can borrow money against the equity you have in your home and spend it on ANYTHING you want.  You could buy a boat, buy a new car, go on a vacation or pay for your child's college education if you wanted to.  The bank simply liens your home which you can't sell until you pay back your HELOC.  Unlike a first or second mortgage that is used exclusively for the purchase of a home, a HELOC is different and since banks are redisent to paying for your vacations, cars and children's education, this becomes a trickier maneuver.  All that said, we still do have success in negotiating settlements with lines of credit.  Our success ranges from total forgiveness to settling for a zero interest loan back to the bank at a fraction of the original loan.  If you don't have a line of credit on the house, no worries... read on.

What if you're behind on your taxes?  Who pays for them?  Taxes are a higher priority than the mortgage and because of that, they always get paid first in the event of a foreclosure before anything else.  To keep banks in control of the asset, they typically continue to make the tax payments until the home sells.  If you are behind on your taxes while selling your home, the taxes are paid first from the proceeds coming for the buyer, which essentially reduces the net dollar received by the bank. Banks are typically covering the short fall of unpaid taxes enabling the sale of the property to change hands.

Who pays for issues found as a result of the buyer's inspection?  When you work with the Braunagel Team, we make sure that the buyers understand and sign a short sale document stating that the seller has no money to make any repairs and that the buyer is buying the house as is.  This happens before we execute the contract.  The buyers can still have an inspection, however the result is a decision to either move ahead or not.  If they find something they are uncomfortable with, they can choose to not buy the house and get a refund of their deposit.  There are a few exceptions to this general rule.  If an inspection finds a large issue like a failed septic, or radon in the house which will then have to be disclosed to new buyers and resulting in a lower sales price of your home, we can negotiate with the bank to absorb the cost of making these repairs so the sale can move forward.  In either case, the cost is absorbed by the bank and not you.

How are you supposed to find a new home if you have  no money and are selling your house short?  Our Government has setup programs like HAFA to give you up to $3,000 to help you move to a new home.  If you qualify, we can sell your home for no money, walk away from the deficiency owed to the bank, and actually close owing nothing and getting an extra $3,000 in your pocket.

So, with the exception of mechanics liens or tax liens and in some cases a HELOC, there's a good chance that working with the Braunagel Team will cost you nothing.  How much will a short sale cost you?  Maybe a better question is how much will a short sale put in your pocket?

For more information on this topic, listen to a short sale video discussing the potential costs of doing a short sale.

For more information about short sales, visit my short sale information center and gain access to valuable information.  I interview local attorneys and host discussions about relevant short sale topics.  If you can't find what you're looking for, shoot me an email and I'll do a blog just for you.

Take a short sale questionaire and determine if a short sale is right for you.

If you're interested in short sales in Trumbull Connecticut area:

Visit my list of Trumbull Short Sales.

Visit my list of Fairfield Short Sales.

Visit my list of Shelton Short Sales.

Visit my list of Monroe Short Sales.

Call me and let me help you with your real estate needs!  203-268-4994 x3... Ask for Tom.

Comment balloon 4 commentsTom Braunagel • March 22 2012 03:09PM

Comments

That is an interesting short sale piece.  I had not heard of that wrinkle.  Let me know if you need a good mortgage person to work with.

Posted by Jeff Jensen (The Federal Savings Bank/Lending in 50 states) over 6 years ago

Great info...thank you for providing it.  Very interesting.  I am going through a Short Sale with Wells Fargo currently; it is a bit frustrating to get a response.

Posted by April Swenson, CRS and Managing Broker - Ocean Shores Real Estate (Coldwell Banker Ocean Shores Brokers) over 6 years ago

Thanks for your reply CHM... What wrinkle are you referring to... the HELOC?

Posted by Tom Braunagel (Keller Williams Realty) over 6 years ago

Hi April... Where are you at with your short sale with Wells...  Have you submitted your package to them, and what system are you on?  Are you using Equator or are you faxing docs over?

Posted by Tom Braunagel (Keller Williams Realty) over 6 years ago

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