Can you walk away with extra cash from a short sale?
You may have heard about sellers actually receiving checks upon selling their house with a short sale. One homeowner recently claimed to have been offered $35,000 from his mortgage company to do a short sale…out of the blue. Can it be true?
In addition to the HAFA program, where the government gives benefits to qualified American home sellers, there are other ways to profit. Many San Antonio homeowners facing foreclosure qualify to get cash for a short sale from their lender. The fact is that many banks do give cash to homeowners who are behind on their payments as an incentive to do a quick short sale. Theoretically, it makes more sense to wipe a faulty loan off the books than have it go into foreclosure.
The question is how to get on your bank’s list of check recipients. The first step: simply call and ask if the institution incentivizes its short sale program and what you can do to receive it.
Some banks that offer cash for short sales may also require that certain criteria are met. For example, the sale must close by a certain date or your income must fall below a certain amount.
Mortgage companies that have been known to pay cash for short sales are:
- Wachovia (now owned by Wells Fargo)
- Loans originated by Washington Mutual, Golden West Financial, or World Savings
- Citi Mortgage
- Bank of America
Some banks even reach out to homeowners on their own. According to Rina Podolski, a REALTOR® in San Diego, banks give no clear reason why they choose one homeowner over another. Even if two mortgages are late with house payments, who knows why one receives an unsolicited offer for cash for a short sale and the other doesn’t? Some banks seem to say “Don’t come to us; we’ll come to you.”
Remember, it never hurts to ask!
A few things you may keep in mind if you are late with house payments and are considering a short sale:
1. If you receive a letter from your lender, open it! You may be surprised to find an offer for cash.
2. Sometimes the bank even sends a contract to streamline the short sale process. Instead of you doing all the legwork, an offer that originates from the bank may mean the sale is expedited and the paperwork more organized.
3. It’s easier to find a buyer for a house that has been maintained. That means banks prefer you to be living in the house during the pre-foreclosure phase. An empty house usually has more “issues.” (Of course, some investors will be happy to buy a house with repair issues!)
4. The money you receive can be used to move out. Banks prefer a quick relocation so they can move another buyer in as soon as possible.
If a seller is willing to cooperate with the bank’s offer, a short sale could mean a much appreciated windfall of cash. When you’re ready to sell, having a buyer lined up with cash ensures that the transaction closes without a hitch.
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