When you’re underwater on your home, you need a way out, and fast. That’s where short selling can help you. Short selling is a process whereby you sell the property for less than what you owe on the mortgage. The bank takes a loss, but they get the property into the hands of someone else that can make the payments. The thought is that the new homeowner will help them recoup the losses sustained by you.
It’s not always your fault that you can’t pay the mortgage, either. This isn’t a “blame-game.” You may have lost your job, or suffered a medical emergency, and now you can’t pay. Here’s how to work with the bank, instead of against them, to create a win-win scenario.
How Cooperative Short Sales Work
A cooperative short sale is one where you work with the bank to sell your home. In a sense, the bank becomes your partner in the sale. You agree to cooperate with the lender to keep the property in good working order during the selling process. In return, the bank lets you stay in the home for free.
You become something of a property manager. Why would a bank do this? For starters, it costs a bank almost $50,000 to go through the foreclosure process. It may cost half as much, or even less, to let you sell the house. At the same time, selling the house on your own may take a long time – time that the bank will spend losing money, which it doesn’t want to do.
Some banks even pay you for entering into an agreement with them to do a cooperative short sale.
How Realtors Help
Some companies, like NJ short sales, can help you speed up the process of selling your home if you need a quick turnaround. Real estate agents bring expertise to the table. Some banks even require you work with a real estate agent if you enter into a cooperative short sale agreement.
Real estate agents will do all of the advertising, and help you with all of the documentation necessary to move the property. Banks can even set up a listing price for you so that there’s no haggling later on when a buyer wants to make an offer. This dramatically reduces the red tape involved and gets the home sold much more quickly than the standard foreclosure auction.
The Benefits To You
One of the major benefits to you is that you get to live in the house without paying rent or your mortgage payment – yes, you get a free residence. The bank may also pay you several thousand dollars, or even up to $20,000, $30,000, or $40,000 to do the short sale.
Basically, the bank is incentivizing you to keep the house maintained by paying you – again, it’s cheaper for it to do this than to go through the expense of a traditional foreclosure.
Your credit will be hurt by this process but, at the end of the day, you still walk away a winner in the sense that you’ve got money in your pocket and you’re out from under the bank’s mortgage. You’ve also had plenty of time to find a new apartment and you didn’t have to pay for a motel or become homeless.
Lisa Anders has spent the last five years as a real estate consultant. She enjoys researching alternatives to foreclosures and sharing her insights through blogging. Her articles mainly appear on real estate investment blogs.