Are Florida Short Sales Possible With No Money?
Sellers are wary of the short sale process because they have no money and fear they will owe the lender the deficiency amount that remains. Homeowners who decide to short sale their properties do so because of a financial hardship that makes it impossible to keep up with their mortgage.
A deficiency is the difference between the amount a short sale property sells for and the balance on the loan. Alma Korshak of Short Sale Facilitators understands that many distressed homeowners fear their lender will ask them to pay the deficiency even though they have no money.
Homeowners ask this question frequently. “If you’re a seller and you’re interested in pursuing the short sale avenue versus having your property go into foreclosure if you don’t have any money can we still help you? The answer to that question is yes we can” Alma said.
Lenders understand that homeowners request a short sale because they have no money and often pay some costs associated with the short sale.
“Normally when you list a property as a short sale the seller, meaning the borrower, there are no monies normally that that borrower would pay to do the short sale because the short sale lender/investor usually picks up all of those fees.”
That does not mean the lender will not ask the seller to pay for the deficiency, however. Lenders are looking to recoup as much of the money on the loan as possible.
“The only time that there would be any monies involved from the seller/borrower’s end is once we get near to the end of the short sale process and we hear back from the short sale lender,” Alma explains. “That short sale lender may say that the investor of the loan is looking for the seller/borrower to do a cash contribution at closing or a promissory note. That is the only time that the seller would have to probably come up with monies.”
How Will I Know If I Will Have A Deficiency?
The short sale negotiation does not begin until the seller’s realtor has a contract in place to purchase the short sale property. At that time, Alma Korshak begins her negotiation with the lender. The lender will tell Alma if they will be requesting that the seller bring cash to the closing.
“What happens is that they will contact us and let us know how much cash they’re looking for the seller to contribute at closing or if they want a promissory note.” Short Sale Facilitators will communicate that requirement back to the seller and the seller’s agent. “We will inform the seller that they have two choices and they have to make one choice. Either cash at closing or a prom note at closing.”
Can the Deficiency be Waived?
Alma and her team pride themselves on their ability to negotiate the best deals possible for their short sale clients. “Just because the lender is asking for a certain amount in cash or a prom note, we will work at reducing whatever the choice is.” Alma does not just accept what the lender requests. This is where her strong negotiation skills come into play.
Short Sale Facilitators will not stop until they have minimized or made every attempt to eliminate the deficiency in a short sale. Some lenders will negotiate and unfortunately, sometimes there will be a deficiency to pay by bringing cash to the table or else signing a promissory note for the deficiency amount.
I Have No Money For The Deficiency
Short Sale Facilitators will work hard to negotiate the deficiency with the lender. The number one goal is to get the lender to forgive the deficiency. A skilled negotiator is your best chance to get the deficiencies forgiven.
In some cases, the lender may negotiate the amount of the deficiency but will not forgive it totally. They will ask for either cash or a promissory note for the deficiency.
“When it comes to cash or to a prom note we will try to work on reducing those amounts. Once we do that we will go back to the seller and then the seller would have to choose one or the other,” Alma said.
Sometimes government funds are available to cover the deficiency. In other cases, low interest loans may be available that can be repaid over an extended period of time.
If you have no cash and are worried about the deficiency in your short sale, call Alma Korshak to schedule a meeting in her Casselberry Florida office. Alma will take the time to explain the short sale process and answer your questions about how you might be able to handle a deficiency.