Understanding The Short Sale Process In NJ

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Short Sale Process Common In New Jersey

With many New Jersey families facing difficult financial situations the short sale process in NJ has became alot more common these days along with foreclosure help for homeowners. Short Sales can stem from many issues that may cause a homeowner to fall behind on their mortgage payments . The most common being unexpected job loss, divorce, bankruptcy or health issues just to name a few. Whatever the situation causing a sudden change in a homeowners income, this process only adds to the frustration and complicates an already tough personal situation if not handled correctly. It is important to understand the process of a short sale in NJ and also hire an experienced real estate agent or short sale specialist on both the buyer and seller side. A short sale specialist who is familiar with these types of transactions and can negotiate the situation is a valuable asset. This can often make the difference between a properly navigated and successful short sale or a long  frustrating and confusing situation for all parties, also a huge waste of time. When completed successfully a short sale can be the easiest way to stop foreclosure in most cases.

What Is A Short Sale In NJ?

A Short sale by definition is a sale of Real Estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens’ full amounts and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. You still may be asking yourself what is a short sale? Simply put a short sale is when a property/house is sold for less then the balance owed to the bank or lender. A New Jersey short sale  can be caused by any change in a homeowner’s income or finances that may cause mortgage payments to be missed. If your looking to sell your house fast in NJ this is definitely not the best approach. Typically your looking at waiting 90-120 days but lenders have been known to drag this process on for more then 6 months in the past.

A Simple Explanation Of The Short Sale Process For New Jersey

The short sale process in NJ is still very confusing to many within the world of Real Estate, and even after all these years can be a long and ambiguous process. Typically a lender will approve a short sale for one of two reasons, either the homeowner is facing a hardship or owes more then the property is worth. To start the process a seller will have to submit a short sale package supplied by the bank , including a hardship letter, financial statements, tax returns, pay stubs etc. You will also include a list of comparable properties sold within your area matching the criteria and specs of your home. Banks like anybody else want to sell the property for as much as they can and will typically want to receive close to fair market value. Most lenders will usually order A BPO ( broker price opinion) or appraisal and will not stray far from that number. In addition just because a homeowner accepts an offer doesn’t mean that the lender will, it is not uncommon for banks to counter or reject an offer. Once an offer is accepted the listing agent will then submit various items to the lender including executed contract of sale, listing agreement, buyers pre-approval for mortgage, and the seller’s short sale package. The bank will then acknowledge they received the required documents and either request further information or continue with a BPO or appraisal. send the file for review by the loss mitigation department, and may request an arm’s length affidavit signed. Once through these steps the bank will then issue a short sale approval letter and allow 45 days for the buyer to obtain mortgage commitment, and close on the property. There are many factors that can delay this entire process and certain circumstances when a bank will terminate a Short Sale package or buyer will rescind the contract. This is why it is important to use a savvy Real Estate agent with Short Sale experience and if your looking to sell your NJ home fast or buy quickly a short sale is not the best option for you.

Benefits To NJ Short Sales For Lender And Buyer

The benefits for a seller may be obvious as foreclosure in NJ is very stressful, frightening and damaging to a person’s credit, financial situation, and assets. The lender can also sue the homeowner after foreclosure for a deficiency judgement if the full balance isn’t recouped after the home is sold or a sheriff sale of the property. Most banks will simply cut they’re losses if an individual has proof of a hardship and opts to perform a Short Sale in NJ during the pre-foreclosure stage. It is even becoming common for banks to award homeowners cash incentives for a short sale and avoid the foreclosure process. With the rise of foreclosed homes lenders benefit greatly from Short Sales as foreclosure in New Jersey is typically a long and costly process for banks and can drag on for years. The bank is not receiving any payment during this period and homeowners are basically living in the property for free. Even after the bank takes possession of the property it is usually damaged considerably and auctioned off at a large discount at a NJ Sheriff Sale. The property incurs holding costs and may also suffer further damage due to delinquency or neglect and the house remains vacant while being marketed. As a result it only makes financial sense for a lender to want to avoid NJ foreclosure process .







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