When homeowners are behind their mortgage payments, lenders are left with no choice but to serve them a foreclosure notice. While you may have several options at your disposal, the best way about your situation is likely to be a short sale. It is a great way to settle your mortgage debt, while allowing you to avoid foreclosure altogether. However, the short sale process is not as easy as it may seem—you may encounter some problems that may hinder and delay the process. It is best to know about them beforehand so that you are able to overcome or avoid these issues.
Getting Junior Lienholders to Accept the Short Sale Amount
To obtain a clear title for your property following a short sale, it is essential for the principle lender to get releases from all junior lienholders. If there is a tax lien, a judgment lien, a second mortgage, HELOC, or any other lien on the property, it must be signed off by the respective lienholder, along with the first mortgage lender. However, getting all the lienholders to agree on the payoff amount is extremely difficult, as everyone is looking to get more money than offered by the principle lender. This can lead to delays in the process and even drive off potential buyers.
Delays and Errors in Documentation
Another common reason homeowners are unable to close deals on short sales in incomplete or incorrect documentation. This may include the documents not dated and signed properly, missing, or not get drawn up in time. Any problem with documentation automatically puts the process on hold, delaying it for days or even weeks. It is best to get all the required documents in order a few days before the closing deal and have a real estate attorney carefully review them.
Unreasonable Timeline Expectations
Short sales are generally faster than any other real estate transaction, though it can take anywhere from several weeks to a few months. Since its quite rare for a lender to accept the first offer, uninformed sellers and buyers expecting a quick turnaround are likely to get frustrated and give up on the deal before the sale of the property is approved by the lender. But the good thing is that most major banks and reputed lenders have streamlined their process, making it easy for homeowners to easily and quickly acquire approval for a short sale.
Most buyers are interested in a short sale because they are looking to strike a ridiculously low offer from the seller. However, banks have investors and shareholders to answer for their investments in distressed properties, and expect to get maximum return. Your lender will likely to outright reject any lowball offers that you may present for approval. That is why you should never submit such offers to the lender to avoid wasting time. Instead, only submit those offers that are closely match to lender’s desired sale price.
Short sales may not be as simple as they may seem like, and involve several legal intricacies that you must be aware about to avoid any potential problems with the process. It is recommended that you work with an experienced and reliable real estate attorney to ensure you are do not make any mistakes and stay on track with your short sale. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today. We have offices in Schaumburg, Warrenville, and Naperville, Illinois.