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Selling as a short sale
Anyone with experience doing this?
I'm about to embark on selling my condo as a short sale. We have long since moved out over 2 years ago. We've been renting the unit.
My agent told me to expect 90 days to sell. My short sale attorney has told me to keep up my mortgage payments. He has also advised me that in a short sale, I can expect the lender to set me up with a promissory note, in essence, offering me to settle, paying $10k or less (he anticipates), after an acceptable offer comes in.
Selling via short sale takes a major hit to one's credit, no?
So why am I going to continue to prospectively pay 3 mos. of mortgage/condo fees for an empty unit on a short sale, which the lender may end up asking me to owe thousands of $$ to settle for anyway?
I'll be posing this very question to the attorney, but I'm wondering if he's just a poor negotiator at this point.
Re: Selling as a short sale
When we were reading and researching short sales we saw advice across the spectrum on this...stop payments or keep paying.
One book said to stop payments. He would have said the above response from someone working at the bank was typical fear mongering (pp please don't take that personally-that's just the way the author portrayed the banking industry). He said the only way to negotiate is to stop paying. Why would the bank work with you while you are doing what they want? He argued that the hit to credit varied on so many individual issues and credit was going to be damaged, so might as well stop paying and hold onto the cash. That being said he was a huge advocate of discussing your personal loan and situation with a real estate attorney before acting for the best advice to your local laws and type of mortgage. He also did point out that depending your financial picture and if your state is a recourse state the bank may ask you to bring money to the table, but it would still be less than what you would have owed and should come with a promise not to pursue a judgement down the line for the remaining deficiency (again if you are in a recourse state).
Other online articles said to keep paying. That banks will still work with you and it will help your credit score not take such a large hit. They also pointed out that you will be able to get a new loan faster if you have a short sale in good standing vs a short sale in default.
We decided to stay put for now, but our course of action would have been to talk to lawyer, ask questions and listen to their advice. However, we were prepared to stop payment. Good luck.
I spoke to the attorney, and here's what I learned:
Since I'm not paying PMI, I really need to keep making my payments. However, he indicated that we need to price the property to sell QUICKLY, so that I don't have to make another payment. Meanwhile, we can't price it too low, because my lender will still want market value. It's a tricky situation, but I will put it on the market for 30 days, and then reassess the situation.