How to Process a Short Sale of Your Home in New Jersey

Property for sale sign board

Every now and then, home buyers in New Jersey happen upon an available property with such a low price tag that their suspicions are aroused. While their wariness is healthy, the prospect may be legitimate. True, some sellers want to unload homes with no end of structural and safety problems, sometimes the low price reflects a sign of the times: mortgages out-pacing home values and overwhelming household cash flow. When such conditions persist, owners might have the option of selling the property for less than the outstanding balance on their home loans. This procedure is commonly called a “short sale.”

Before considering a short sale, home owners should know a few things:

Do Not Wait for Foreclosure

Granted, the owner does not have to do the work of selling in a foreclosure. That is the only plus to this option. For those who are months behind on house payments, arranging a short sale might be demanding but it gives them time to plan a reasonable exit strategy. Foreclosure, on the other hand, moves faster because the bank or finance company wants to sell the property as soon as possible, according to the National Association of Realtors (NAR). Real estate owned (REO) inventories are a burden to lenders. Approaching the bank with a short sale proposal might stave off an eviction.

Find an Investment Company Who Understands Short Sales

Working with an investment company such as Sell House North Jersey to work through a short sale lessens the burden on you since they are familiar with how these sales work. Commissions for short sales are more modest than a more traditional transaction and many realtors shy away from them. By dealing directly with the investment company the bank gains confidence regarding the exact number they will receive for the house. By having a direct buyer work with the bank they do not have to go through the hassle of negotiating various lowball offers a realtor may bring them. The real estate investment company can help sellers negotiate with their lenders and create a mutually agreeable sales contract. 

Document, Document, Document

Ultimately, it is the mortgagee, i.e. the lender, who decides whether to accept a short sale proposal or not. The likelihood of acceptance is enhanced if distressed owners can back up their claims that:

1) The value of the property has declined to a level at which its sale would not satisfy what is owed on the mortgage.

2) Income and assets are insufficient to continue making mortgage payments.

Keeping good financial records and having an updated appraisal helps to make the case.

It Does Not End with the Lender

As real estate investor and radio financial adviser Dave Ramsey points out, the purchaser must agree to the contract as well. Appealing to the lender is, of course, essential; without a buyer, though, foreclosure looms.

New NJ Law Benefits Short Sellers

Since 2017, New Jersey loan servicers are required to respond to good faith short sale offers within 60 days. The answer is acceptance, denial or a call for additional information. If a denial is issued, any buyer deposit is refunded completely. Having a seasoned short sale attorney on the team is optimal. Given the nature of the transaction, sellers can expect no proceeds from the short sale of their homes.
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