Chico Financing

Anatomy of a Chico CA Real Estate Transaction

What’s All This Talk About Short Sales on Chico Homes?

November 10th, 2007 categories: Anatomy of a Chico CA Real Estate Transaction, Chico CA Real Estate News, Chico Financing

By guest author Mike Wiegert, Broker, Chico Homes

For Chico, CA homeowners that can’t afford to pay their mortgage, there is an alternative to bankruptcy or foreclosure proceedings – it is called the short sale.

The short sale really begins when you finally realize that your house just isn’t worth what it was just a few short years ago.

The next realization is that if you sell your house for what it’s really worth, you’re not going to actually get any proceeds back from the sale. That’s a big pill to swallow, but after you do, you might have the final realization that you’re really just starting from scratch like you did a few years ago. Back then, you’re credit was pretty good, you had your health, all your kids were fairly normal and you had a job. So rather than losing your home in foreclosure AND ending up with a terrible credit report, you think “I wish we could just be back to where we were back then.”

It’s at this point that a “short sale” might be the answer.

A short sale occurs when the net proceeds from the sale of a home are not enough to cover the sellers’ mortgage obligations and closing costs such as property taxes, transfer taxes and commission.

In other words, what a buyer might be willing to pay for your home isn’t going to cover what you owe on it and what it’s going to cost you to sell it. Unlike a foreclosure, a short sale can keep the homeowners credit intact. The first step is to do some research a find a Chico, CA Realtor that knows the Chico real estate market and has had experience and success in the short sale process. Your Realtor will need special skills and a persistent attitude in dealing and negotiating with your lender.

Banks are not in the business of owning and marketing homes and many would much rather discount the current amount of their loans than have to go through the process of marketing and holding a property in a slower market. This lender attitude will certainly grow as the number of foreclosures and repossessions increase. Conversely, the popularity of buying in the short sale market appears to be spreading rapidly.

Be advised, before you contract with any Realtor to market your home utilizing a short sale concept, you should consult a real estate attorney for the legal implications of the short sale and an accountant about the tax liabilities involved in the short sale.

You must understand everything upfront before the short sale process begins- look to your Chico CA Realtor for assistance.

1. You must prove to your lender that you are unable to afford to pay your mortgage.

If your lender is aware that you possess certain assets such as stocks or bonds, or you have a high paying job, your lender may require you to sign a note promising to repay at a future time any discount of what you owe that they make in the short sale. If you do not possess these types of assets or your job clearly indicates that you would not be able to repay such a debt, it is possible it may be forgiven.

2. Next the lender will appraise the current market value of your home.

The lender, with the help of your Chico, CA Realtor will calculate the amount of the outstanding debt and the customary costs of selling. If the proposed short sale will bring them more money than they would get during auction, the lender will mostly likely agree to it. End result, you didn’t pull the equity out of your home that you might have thought you had, but your credit is still intact, you’re out of a mortgage payment you can’t afford and the dream of once again owning a little corner of this world still burns brightly!

If you find yourself in a situation where your payments are are becoming too much to handle, please contact us at Chico Homes! We may be able to assist you in selling your home and avoiding a credit-destroying foreclosure.