“My wife and I need to sell our condo, but we owe $519,000 and its only worth about $495,000. An agent we know told us we could do something
called a short sale where the bank agrees to accept the proceeds from the sale even though its less than the $520,000? The agent made it sound so
easy, which of course made me concerned. Is there any downside?
***ANSWER:
Last week I went over the downsides: Credit damage, income taxes due, hassle, and low probability of success.
This week, well go over the basics that banks look for in deciding if theyll approve you for a short sale. Its basically the opposite of getting approved
for a loan — you must show that you cant pay the mortgage.
You must prove to the bank that you have
1. Hardship
You must have a hardship that is not your fault that happened to you since you got your mortgage. Its must be something that would keep you from
paying your mortgage. Common hardships include death, divorce, illness, job loss, other loss of income, etc.
2. Inability to pay
You must prove to the bank that you cant pay your mortgage. In other words, if you got a divorce, but both you and your soon-to-be-ex each easily
make enough to pay the mortgage and normal living expenses, its unlikely youll be approved.
3. Few assets
If youve got more than a few bucks in the bank, the bank will either ask you to pay some or all of the loss, or theyll turn you down flat.
4. Appraisal
Your home must appraise near or below the price youre selling it for. The bank wont let you sell it too cheap
which is often what it takes to hook a
buyer given all the short sale delays and low probability of success.
Strategies To Sell Your San Diego Home
