Q: What is a Short Sale? A: A Short Sale is a real estate transaction in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. The bank agrees to discount the loan balance due to permanent economic or financial hardship on the part of the mortgagor or homeowner. When the homeowner sells the mortgaged property for less than the outstanding balance of the loan, the proceeds of the sale are turned over to the lender, sometimes in full satisfaction of the debt. The sale of the property is contingent upon approval of the lender.
Q: How does a Short Sale work?
A: Us, the buyer, will contact your bank and fax over a short sale package (documents that explain your financial hardship, our offer to buy, and negotiating material) to their lose mitigation department. Also, if trustee auction is approaching, we will put in a request to postpone the auction. We would then request that the bank order a Broker Price Opinion (BPO) - an appraisal. On the day of the BPO, we or one of our affiliate realtors will meet with the BPO Agent to present them with information on the situation with the house. At this point, the lender will either make a counter-offer or decline our initial offer. If the bank counters, negotiation will commence until the bank either finally approves our final offer or declines it.
Q: Why would my bank approve a Short Sale?
A: A bank would approve a Short Sale because a foreclosure is an expensive process. If the house is not sold at auction, the bank will incur costs for paying the trustee (the person or entity that carries out the foreclosure proceedings), for hiring a company to clean-out the house, utilities, general home maintenance, property taxes, legal fees, realtor commissions, etc. Not to mention, all those months of unpaid interest and decline in market value. Because banks lose so much money foreclosing on a home, they will entertain alternative measures, such as a Short Sale, if they believe it will result in a smaller financial loss than foreclosing.
Q: Will Equinox Properties need any information from me?
A: Yes. I order to prove to the bank that you are experiencing financial hardship we will need your financial statement (a group of documents that illustrates your current financial situation) in order to reflect your lack of funds, thereby explaining your inability to keep up with your mortgage payments. We will also need a letter from you explaining the events that lead up to you falling behind on your mortgage. Depending on your situation, other miscellaneous material may be needed as well.
Q: Do I have to pay Equinox Properties a service fee for facilitating the Short Sale?
A: No, because we are not a service provider. Since we are buying the property from you, there is no fee associated with doing business with us.
Q: Do I have to pay any closing costs?
A: No. Your bank will be responsible for paying seller closing costs.
Q: Can I expect to make any money from the sale of my house through a short sale?
A: Sadly, you cannot make any proceeds from the sale because your house is being sold at a lose. However, if you have household items you would like to get rid of, we may entertain purchasing those items from you.
Q: If my bank forgives my unpaid debt, will I face tax consequences?
A: If your bank agrees to relieve you of your obligation of payment on your debt in full or partially, the forgiveness of the unpaid part of the debt might be deemed your "income". We advise that you confer with your accountant or attorney about the tax consequences arising from the forgiveness of your debt.
Q: How long will it take for a Short Sale to be completed?
A: There's no definite answer to this question. It really depends on how flooded the bank is with other properties in default and time spent negotiating (typically 3 - 9 months). However, our standard approach is to reach completion in approx. 3 - 4 months by implementing proven methods of systematically speeding up the process. During this time period, your foreclosure will be suspended.
Q: What happens if the bank doesn't accept Equinox Properties' offer?
A: If the bank refuses to accept our offer to buy, but there is another buyer whose offer the bank might accept, then we will workout an arrangement to step out of the deal to allow the sale to go through. We are here to help. We certainly do not want you to end up losing you home to foreclosure and/or have to consider filing bankruptcy. But, if you do business with us, you will have a good chance at avoiding either of the two.