Thursday, July 5, 2012
Chicago Tribune on the “Short Sale Maze”
story on the continued complexities with short sales. The Oak Park and River Forest short sale lawyer at our firm appreciate the confusion the reigns among many local residents who are struggling with their homes and trying to learn about all of their options. Short sales are often a terrific way to get a fresh start with fewer long-term financial consequences. However, trying to work through a short sale is often stressful and baffling for the uninitiated.
At the very least, sellers (and buyers) should know what they are getting into when working through a short sale--the aid of a legal professional is often essential.
There is nothing all that complicated about the idea of a short sale. It is simply an agreement where a lender (bank) agrees to let a homeowner sell the house to a third party for less than the amount owed on the home. This allows the seller to get out of the mortgage without going through foreclosure, and, when done properly, to be relieved of a future deficiency judgment from the bank. The bank often prefers this, because it may be less costly and quicker than a foreclosure. While the lender does not like to give up on money it is owed, it sometimes makes sense for the lender to cut their losses earlier rather than later.
The Oak Park and River Forest real estate attorneys know, however, that the actual mechanics of a short sale quickly become complex.
According to a new report from the National Association of Exclusive Buyer Agents, in many areas only about 25% of short sale purchase contracts actually make it to closing. However, about 50% of homes offered as short sales actually end up being sold in that manner. In other words, about one in two short sellers will complete the process successfully, but many of them will need to go through multiple offers before everything comes together.
Reasons for the low success rates are varied. At a basic level, many deals fall through simply because of the time it takes for everything to come together. Buyers often cannot wait as long as necessary--months and months--and end up walking away. New guideline changes now in effect last month regarding homes backed by Fannie Mae and Freddie Mac are seeking to speed up the process. However, it remains to be seen if the new guidelines will actually translate into stepped up approval rates and speedier decisions by the banks.
No matter what, properly preparing the “hardship package” is critical for the seller. Not providing a thorough package may lead to significant delays and a scuttled deal. Having help with this is critical.
Though many challenges to short sales remain, it is important for local families not to write off the option. In many cases the sale fails because sellers do not have close professional assistance to ensure they navigate the process effectively. Short sales are still a popular option. In this first half of this year alone, about 110,000 homes were sold via short sale--about 12% of all home sales.
If you are in Oak Park, River Forest, or throughout Chicagoland, consider getting in touch with our office to learn more about your options and to see how we can help.
See Our Related Blog Posts:
Bank of America Announces Principal Reduction Plan for Underwater Homeowners
Oak Park Foreclosure Defense Lawyers Discuss the State of Illinois Foreclosure