It should be no surprise that even with the rising Hawaii real estate market, there are still many homeowners who have underwater mortgages, i.e. they owe more on their mortgage than the home is worth. It doesn’t matter whether it’s a single-family house in Honolulu, a townhouse in Ewa Beach, or a Waikiki condo. There are homes everywhere on Oahu and the neighboring Hawaiian Islands that are upside down in the mortgages.
If that’s you, then what are your options? If you don’t have the money to bring your loan current (reinstatement) and your bank won’t work with you on a loan modification, then you likely will need to sell your house to avoid foreclosure.
But how can you sell your house if you owe more than it’s worth?
The Short Sale
A “short sale” is where your lender allows you to sell your house for less than what you owe them. Your bank takes a “short” position on their mortgage, which is a fancy way of saying they are willing to accept a loss.
Why would they accept a loss? In most cases, it’s because they want to avoid having to foreclose on you and incur all those legal expenses. They also don’t really want your house back — that’s right, your lender does NOT want to take back your house. Why not? Because banks aren’t in the business of owning real estate — they’re in the business of lending money.
So they’d rather just get what they can today so they can go originate a new loan to another homebuyer elsewhere and get back to their normal business model.
However, don’t think this is easy. Your short sale needs to be approved by your bank….. and many don’t. There’s no rule saying that your bank has to accept it — they can still pursue a foreclosure per your mortgage documents.
What you really need is…
1) a PLAN, and
2) to work with SHORT SALE PROFESSIONALS who know how to navigate the process to give you the best chances of getting your short sale approved.
Getting Short Sales Approved
I can’t stress this enough — short sales are tricky beasts. You really need to work with professionals who have short-sale experience.
That’s why we use professional short-sale negotiators for all the requests that come our way for homeowners with underwater mortgages.
Any ol’ realtor will not do. There’s another skill set entirely that’s required to jump through all the bank hoops in order to get that final approval.
Here are a few tips to help ensure your short sale gets approved…
- Ask for references from past clients or anyone you speak with to help you. Testimonials of past successful customers speak volumes.
- Ask what their plan is for the short sale process. They should be able to tell you instantly how the process plays out.
- Be conservative in your list price. Be willing to be flexible — remember, the point is to get your bank to accept it. Trust the professional to be honest about your home’s value.
- Get all your financial documents in order — tax returns, pay stubs, bank statements, etc. Help the process – don’t hinder it.
- If you have a true professional working on your behalf, then let them do their job. Don’t interfere with open houses, bank communication, etc. There’s often a method to the madness, so trust the method.
- Don’t get frustrated — short sales can take a long time, despite the name. Many buyers do not want to go through the process — this may increase your home’s time on the market. Your bank may also come back with more paperwork when you least expect it. Trust your professional to minimize the stress and remember — there’s a process here to be followed.
- Be open to working with investors. An investor won’t have to bother with a bank loan since they PAY CASH and they’re going to stick with you for the long haul, even if it takes 6 months or longer. A retail buyer? They’ll be long gone. An investor will be with you every step of the way.
If you’re facing foreclosure or you’re worried about your mortgage, then contact us today. We’ll look at your financial landscape and see if a short sale is the best option for you. If it is, then we’ll get our professional short-sale negotiators to get to work right away for you.