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Shorts Sales Can Save A Homeowner From Foreclosure

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Oct 26, 2009 2:05 pm US/Mountain

Shorts Sales Can Save A Homeowner From Foreclosure

Written by Andrea Lopez

Reporting
Andrea Lopez
DENVER (CBS4) ― Every week in Denver county there are anywhere between 100 and 150 homes that go into foreclosure. That's according to Stephanie Fix with RE/MAX, a realtor who specializes in what are called short sales -- a process that can save a homeowner from going into foreclosure.

A short sale is where there's a negotiation with the bank to sell the home for less than what is owed on the mortgage. It's legal, according to Fix, although many people seem to shy away from them because they believe they are scams or don't understand the process.

"They key is to make sure that an agent who has a listing has experience negotiating with the bank, marketing the property, communicating to the buyers throughout the process ... sometimes it can take 90 days," said Fix. "If you are patient, you find a good short sale with a good listing agent who knows what they're doing, then, as a buyer there are some incredible deals out there right now."

For example, Fix is currently working to sell a $2.5 million home through the short sale process. The current bid on the home is $850,000. For a buyer looking to find a good deal on a home, a short sale can do just that. They do require more negotiating, more paperwork, and they can take up to 90 days to close on, according to Fix.

For financially-struggling sellers who need to sell their homes, the short sale process is a way to avoid foreclosure, which would be much more damaging to their credit than a short sale. Fix says sometimes the bank can come back and ask that seller pay the difference between what the home sold for and what was owed on the mortgage, but she also says that a good realtor or an attorney can often negotiate with the bank and reduce the amount that is owed in the end.

Fix says there are basically three things sellers need to sell a home through the short sale process. The home needs to be listed and marketed by a realtor, a strong offer has to be brought to the table, and the seller has to prove that he or she is in financial distress.

"It (financial distress) can be medical, it can be a divorce, it can be a job relocation where someone has to move for a job," she said. "Those are the reasons that we do short sales. Just remember that you can't have assets in your savings or your checking account -- you truly have to be financially distressed."

Additional Resources

To learn more about the short sale process, watch Stephanie Fix in our "Web Extra" in the video player to the right as she explains what it is, how to qualify for a short sale as a seller, and what you can expect if you're trying to buy a short sale.

(© MMIX CBS Television Stations, Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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