Fred Sed

More short sale questions answered by resident short sale expert Fred Sed.

Answers to common questions about short selling your house.

With all of the chaos in the mortgage industry, short sales have become the answer for many. Unfortunately, they are not the panacea for every problem. Even though short sales are increasing they are still fairly complex. First you must meet all of the criteria for a bank to even consider a short sale. Second you must convince the bank that the market value of the home is lower than what they are owed (remember, they don't like to take a loss on any loan).

Short sale Q and A with our resident expert Fred Sed. In this article Fred talks about investor offers and what to do with an inexperienced Realtor.

Q. My house is really nice, why is the short sale offer so low?

A. Sellers sometimes have an emotional attachment to their home and feel that a short sale offer is too low. It is important to remember that to qualify as a short sale, the seller can never receive any money in the transaction. The only real exception is when the seller has tax liability concerns. Otherwise, the price should not matter to the seller.

Q. My house is already listed for sale on the MLS but isn't selling; can I do a short sale?

A. Yes, a short sale in this scenario is relatively common. Some lenders even require that a house be listed for sale before approving a short sale in order to show that a discount is necessary.

Given the large number of real estate professionals, not to mention the vast number of "do it yourself'ers"  in the real estate arena, many are questioning if they can short sell their own home. The answer, however, is a resounding NO. It is actually illegal for an owner to handle his or her own short sale. In fact, neither the homeowner themselves nor a friend or family member can short sale the property. A short sale must be an Arms Length Transaction, which means exactly what I have stated above. No one who is involved with the defaulted owner can assist them in the short sale process.

Orange County Real Estate: Who owns the home after a short sale and what happens to the property taxes?

Homeowners in foreclosure do not have many options, but some of the options that they do have are:

1. Sell your home through the normal channels
2. Bring your mortgage current by making the missed payments and paying the penalties
3. Refinance your mortgage with another lender
4. File for bankruptcy

Most of the time when a short sale is approved or when the process has just begun the home owner has already had a notice of default filed against them, meaning they already missed about three payments and have entered the foreclosure process, or they have just missed 1-3 payments.