Selling your house when you owe more on it is called doing a short sale, and most people have heard of this. They have been going on for five to seven years, depending on what part of the market and United States you’re in; in Northern Virginia, at least for five years, very solid. We’re starting to slow down now, which is good news for our local market. Values are coming up, but not drastically. They’re coming up enough that now we’re seeing some people able to hold on.
Now, if you need to do a short sale, absolutely make sure you address a real estate agent that has actively done short sales, and recently. Short sales and how they are managed change monthly. I would say at least every three months there’s some type of a change, or there’s some type of system that’s been put into place, whether it’s an online system for managing the short sales, or just the way the banks are responding. So make sure you’re dealing with a Realtor that is active in short sales, that’s closing at least one or two in a month. Some Realtors tell you they’ve got a lot of experience, then you find out they’ve only closed one or two. They have no idea about negotiation. It is absolutely okay if your Realtor is not negotiating your short sale, as long as whoever they’re referring you to for the negotiations are experienced and active in doing it.
There are implications in doing a short sale. It does hit your credit. Even if your credit score is wonderful when you finish the short sale, even after the hit, most people aren’t going to lend you a lot of money on a major ticket item like buying a house or buying a car. Consider your options, speak with your Realtor about what your concerns are, and you can absolutely sell your house in this market. It takes a little bit of time. On average, we’ve seen our short sales with two loans take about four months to get full written approval from the banks.
A short sale works almost like a standard sale: seller and buyer agree to the terms, and then that offer is sent off to your banks with all of your supporting financial information. Then, the bank is going to review the offer. And then they will either accept the offer the way yourself and the buyer agreed, or they’re going to counter back on price or terms. And typically it’s usually only related to price when they counter back. But very often is your Realtors help you sell the house at market value, pricing isn’t going to be the challenge. There may be some other items, and they’ll be shared with you as they come up. But in the end, if you don’t like the counter-offer from the bank, you can absolutely say no. Now, of course, that’s put you in a tough situation moving forward. But there’s always a solution if you take time, stay calm, and talk to the local professionals.
If you have questions about real estate in Northern Virginia, especially related to short sales, give us a call, we have the answers.
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By Steve Bradley