4 Things You Didn’t Know About NJ Short Sales

NJ short sales

A short sale occurs when a homeowner sells their house for less than they owe their lender. This normally happens when a homeowner needs to get out of ownership of the property during a down market or while working with their lender in an attempt to avoid foreclosure. Before you consider selling your home, here are some thing you might not know about NJ short sales.

1. You’ll Need Approval

In order to sell your home for less than you currently owe, you will need to get approval from your lender. Getting approved for a short sale is normally a matter of proving to your lender that you are unable to pay back the home loan in full due to financial hardship or a major life change (like illness, divorce, job loss, or a sudden need to move). The lender will approve or deny your request for a short sale based on the loss they anticipate taking and your financial circumstances. If the short sale is likely to make them more money than if they let the house go through the foreclosure process, it is a smart move for the lender and they will likely approve the short sale.

2. The Short Sale Process is Lengthy

Don’t expect to be able to sell your home quickly through a short sale. The process can take on average nine months to be completed. Because your lender will have an active involvement in approving buyers and negotiating the terms of the sale, there is more back and forth between all involved parties than in a traditional property sale. It can also be difficult to find motivated buyers who are willing to wait, meaning you’ll spend more time with your home on the market.

3. Your Credit Score Will Drop

While a short sale can protect you from foreclosure, it will still impact your credit score. Depending on where you started, a short sale can drop your score 100-150 points. A lower credit score will make borrowing more difficult and can cause your interest rates to increase. The good news is, despite this heavy impact, you will be able to bounce back quicker from a short sale than a foreclosure. Most people who go through a short sale find themselves eligible for another home loan in a few years.

4. The Right Real Estate Agent Can Make a Big Difference

If you are trying to sell your home via short sale, the process is a lot more involved than a standard for-profit sale. There is added paperwork and additional steps that need to be taken that can be confusing if you are not a real estate pro. An agent and/or attorney experienced in short sales will be able to guide you through the process. Hiring professional guidance is an added expense, but they know how to present short sales to lenders for a better chance at approval and can give you tips on how to make more on the sale in general. You’ll see a return on your investment when your home sells for closer to what you owe on it.

The short sale process can be long and full of ups and downs. If you are facing foreclosure and considering a short sale, Veitengruber Law can help. We network with real estate agents experienced in short sales and provide a full array of real estate attorney services in Central New Jersey and the Jersey Shore.


NJ Short Sales: Explained

NJ short sale

Changes in the economy and instability in the housing market have presented major challenges to homeowners in New Jersey. Homeowners may find they owe more on their house than what it is worth on the market. Sometimes, it only takes one unexpected life event (divorce, illness, disability, job loss, etc.) for homeowners to find they cannot afford their mortgage payments anymore. Making the decision to leave a home is never easy, but the attorneys here at Veitengruber Law are experienced in offering compassionate, competent counsel to achieve a favorable outcome for our clients. As a debt solutions agency, our team is skilled in NJ real-estate transactions and short sale negotiations.

In a short sale, a property is sold for less than the balance owed to the lender. The lender agrees to basically give a financially burdened mortgager a discount on the balance of a mortgage. Short sales tend to be less harmful to credit ratings and comparably quicker than a foreclosure. That being said, the short sale process is certainly not “short” and there is no established legal limit on how long the process should take. There is a plethora of paperwork and fine details to work out in a short sale and the process can take months, or even years. The attorneys at Veitengruber Law have invaluable knowledge and experience navigating the complexities of any short sale to give our clients peace of mind during this process.

The first step in a short sale is to contact a realtor to perform an assessment on your home’s fair market value. Veitengruber Law has strong relationships with area real estate agents experienced in short sale negotiations. After the home has been assessed, the next step is to list the house for significantly less (where the term “short sale” comes from) than the actual value of the home. If effective, the drastically reduced price will drive bids for the property.

In order to agree to the short sale, the bank or lender will need to see evidence of severe financial difficulties. The lender will need to understand why you cannot afford the mortgage payments, whether for medical, financial, or personal reasons. This can be explained in a letter of hardship. The more detailed the letter is, the better picture it will provide the lender of your financial stress.

It is important to note that while a short sale is not as damaging to your credit rating as a foreclosure, the lender is still taking a financial loss and subsequently your credit score will be affected. Typically, short sales will affect a credit report for 7-10 years. However, a short sale shows that you took action before the bank had to intervene, which looks much better to future lenders. There is also another important benefit to a short sale over a foreclosure. In some cases, a homeowner can receive some compensation in the form of relocation costs. So while you will not be making a profit by selling your home, you can receive financial assistance to help you establish a new residence.

The process of short sales in NJ can be intimidating and overwhelming. But you are not alone in this process. Veitengruber Law is here to protect your interests. We serve clients in Atlantic County, Monmouth County and Burlington County. Set up a consultation with us today at our offices in Wall or Bordentown.

Image: “House for sale…” by jongorey – licensed under CC 2.0