10 Short Sale Myths
Here are ten Short Sale Myths that my team and I are trying to dispel:
MYTH 1: You must be behind on your mortgage to qualify for an Arizona short sale. Lenders look for three things: a "verifiable hardship," such as a job loss, pay cut, job transfer, divorce or serious illness; a monthly cash-flow shortfall or pending shortfall and insolvency; or lack of liquid assets that would allow you to pay down your mortgage. Henderson said distressed homeowners often wait too long, and should consult with a qualified agent before burning through savings or trying such desperate measures as using a credit card to cover mortgage payments.
MYTH 2: Arizona Short sales rarely get approved. We have an 85 percent success rate for closing Arizona short sales but says they still take patience, requiring anywhere from 30 to 120 days for lender approval.
MYTH 3: Banks would rather foreclose than approve an Arizona short sale. What we suggest is that banks typically lose 35 percent more on a foreclosure than a short sale. They also avoid the hassle and liability of vacant properties if they can approve a sale before foreclosure.
MYTH 4: There's no time to negotiate a short sale. It's always worth a try. This is defentally not the case.
MYTH 5: It's fine to make simultaneous offers on Arizona short-sale properties. While it may be legal, we bristles at buyers making offers on short sales that are not sincere. Multiple offers clog the system and could force sellers who think they have a solid offer into foreclosure when the offer is rescinded.
MYTH 6: An Arizona short sale is a fire sale. Not just any offer will do. Home sellers may counter; their agents can only bring reasonable offers to the bank, which typically means market value.
MYTH 7: Anyone can help navigate an Arizona short sale. Henderson suggests homeowners find an Arizona real-estate agent with special training in handling distressed properties.
MYTH 8: An Arizona short sale is not worth the effort. For buyers, Arizona short-sale properties are often in better shape than foreclosures and are priced to sell quickly. For sellers, there is no lasting stigma for completing an Arizona short sale.
MYTH 9: Arizona Short sales are as financially damaging as foreclosures. Unlike foreclosures, Arizona short sales are not reported on a person's credit history and don't present problems with employment or security clearances. Homeowners who undergo a foreclosure are ineligible for a Fannie Mae-backed mortgage for five years, while a homeowner who closes an Arizona short sale is eligible for a Fannie Mae backed mortgage after only two years.
MYTH 10: Arizona Short-sale negotiations are adversarial. We still hear from buyers' agents who loathe short sales. We once felt the same way. Arizona Short Sales are more a matter of communication and organization -- having all the paperwork in order and knowing exactly who needs what when in order to help banks approve a sale.
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