Washington DC, Maryland and Virginia

In its simplest terms, a short sale means purchasing a home for less than what it owed on it. Unlike the foreclosure process, the owner hasn’t yet given the house back to the bank or lender but they may be in arrears on their mortgage. In a situation like this, a short sale may not be the optimal transaction of the seller’s life but it can be a way out of crushing debt and legal proceedings. Properly handled, it allows the owner to eliminate financial uncertainty and risk by negotiating a debt solution for less than the principle owed.

Are you behind on your mortgage payments?

There are any number of reasons that can play into a homeowner’s financial difficulties. The Washington DC Metropolitan Area is considered a strong market and the real estate recovery has been been out in front of other regions. That doesn’t change the fact that the country’s economy has suffered in recent years. People are still feeling the effects of what has been called “The Great Recession”. Sometimes bills pile up faster than revenue and the math can simply become too hard to reconcile.

If you are a home owner in Maryland, Virginia or the District of Columbia and experiencing financial distress due to the loss of employment, illness, divorce, mortgage recast or any other hardship, District Partners at Compass can help. We will sit down with you, discuss your options and give you an honest and accurate opinion of the current value of your home. If you decide to proceed with a short sale, we will give you the representation needed to prevent a potential foreclosure and further deterioration of your credit.

Short Sale: A Win-Win transaction between you and your bank. Why?

First, we understand that a short sale during difficult circumstances isn’t what you would normally consider a winning proposition. However, positive outcomes can be had during times of adversity. The ultimate impact of a short sale is much less harmful to your credit rating than a foreclosure, bankruptcy or extended delinquencies. Your mortgage account will most likely indicate “Account Settled for Less than Full Balance”. It will give you a much better path to repairing your credit. As for your lender, it allows them to avoid attorney fees, court actions and ultimately a potentially long and costly ownership of the property. Banks don’t like owning properties these days.

Why would my lender approve a short sale?

As we mentioned above, banks are not in the business of owning real estate. They don’t like having too many properties on their books. They like acquiring money, holding money and loaning money. Loaning money allows them to get more back in return. The foreclosure process is not free for them. Every house they foreclose on costs them money and sometimes, quite a lot of it. Also, short sale properties tend to be in better condition that foreclosures which can be vacant, vandalized and generally distressed.

Why would a lender take less than the mortgage balance”

The foreclosure process is long, costly and involved. It involves attorney fees, maintenance costs, property taxes, utilities and the many other fees associated with home ownership. A short sale can bring a better return than a foreclosed property at auction. Ultimately, short sales save the banks money and that’s the bottom line.

Is a Short Sale an option for you?

There’s not one simple answer. It depends on a variety of factors. We would always advise a home owner to consult with an experienced real estate or financial professional before things get out of hand. Selling from a position of power is always better than setting through adversity. However, if you’re at a point of financial distress and can no longer sustain your mortgage responsibility, a short sale could be your best alternative.

Can you determine what the short sale outcome will be?

Unfortunately, no. A short sale, like any effort to sell real estate, is speculative. No one can predict what the final outcome will be or if you will achieve a “Full Release” of responsibility. No one can guarantee that your lender will “just” let your obligation go. What we can do is to share our knowledge and experience and represent your property to the best of our abilities. We take short sale representation very seriously. The District Partners team understands that it comes from challenging situations and we work diligently to reach the best possible outcome.

Our commitment in a short sale representation is to properly educate, inform and prepare our clients for the short sale process. We present the advantages, challenges and obstacles. The majority of our short sale representation clients achieve a satisfactory full release transaction on their mortgage obligations. The key to your success is determined by the following important factors:

  • Early detection and the decision to sell (avoiding hiring a trustee attorney to intervene in a foreclosure proceeding).

  • Truthful hardship statement with supporting documentation.

  • Good Will and transparency.

  • Proper representation by an agent with short sales experience.

What is the benefit of a short sale over a foreclosure?

If a short sale is successfully negotiated and accepted by all parties, your credit will only show any late payments that may have occurred along with an “Account Settled for Less than Full Balance” notation on your credit reports. This is much preferable to a “Foreclosure” on your credit report which will result in the inability to obtain another mortgage for as much as seven years. With changing laws and banking regulations, the damage to your credit from a foreclosure could even get worse. With a successful short sale you can repair your credit faster and more easily and may qualify for a new mortgage within a couple years.

Who pays the real estate commissions in a short sale transaction in Virginia, Maryland and Washington DC?

While it can vary from state to state and can change depending on the seller’s representation agreement, our agency short sales services include no charge to the home seller. We understand the hardships involved. The lender may pay our commission on a case-by-case basis but regardless, all we ask of our clients is to repay us with honest recommendations and referrals to friends and family.

What documentation is required for a short sale transaction?

Be prepared because there’s plenty. It’s quite similar to the documentation needed when obtaining a mortgage. This is because you will have to document your financial hardship and provide proof to your lender that your case is indeed legitimate.

We will contact your lender and inform them that you have chosen the District Partners team at Compass as your representation in the negotiation of a short sale. At that point, your lender’s loss mitigation department will instruct us in the documentation to collect. Typically, your lender will require the following:

  • A form authorizing the release of information to District Partners.
  • A hardship letter explaining your situation.
  • A financial worksheet in your lender’s format.
  • A listing agreement and seller representation agreement between you and District Partners at Compass.
  • Copies of your two most recent tax returns.
  • Copies of your two most recent bank statements (all your accounts).
  • Copies of your two most recent pay stubs.
  • An Opinion of Value on your home, performed by District Partners.

How long does a short sale process take?

This depend on your lender. Typically, a short sale will take between 90 to 180 days. There are variations on both sides however. We have recently been seeing short sales approved in as little as two weeks and there are also cases in which a short sale can take up to 18 months. The number of mortgages against your home plays a factor, along with your lender’s specific policies. Other factors include the state in which you live, how busy the lender is, how effective your real estate representation is and the bank’s need of liquidity.

The short sales stigma:

There can be feelings of guilt or shame associated with any major financial difficulty. A short sale, while challenging, can be a good alternative to foreclosure and possible eviction. The short sale concept is fast becoming more popular as a way to mitigate deeper financial and emotional distress. It allows the homeowner to move on and get a fresh start. Our advice is not to feel alone. We are passing through the most difficult economic period in our lifetime. At District Partners, we are here to listen and to help.

District Partners at Compass will work with you and your bank. We have experienced short sales experts in Virginia, Maryland and the District of Columbia that are ready to assist you. We have the most updated Certifications in the Real Estate Industry that will help guarantee a successful Short Sale.