Do you owe more on your Hawaii property than it's currently worth? Are mortgage payments racking up because of some other life circumstances, and are you afraid of going into foreclosure? In this blog, I'm going to explain how to sell your house for less than you owe and hopefully walk away without filing for bankruptcy and with lender forgiveness.
Understanding Your Options
So rather than foreclosing, you have two options you can try first. The first step is always to talk to your lender about what options you have for your Oahu property. They may be able to work. Different payment options for you before short sales or foreclosures are even part of the discussion. If you are in arrears and cannot work something out with the lender, your next option is to short-sale your property.
A short sale occurs when the bank or lender accepts less than what you owe on your property, and the truth is that most times the bank would rather receive the proceeds from a short sale versus going into foreclosure because they lose a lot more money doing that. So you might be.
Short Sale Benefits
So what's in it for me? First, you'll avoid that foreclosure from showing up on your credit. Once it appears on your credit, it's extremely damaging. It will likely affect your ability to rent, apply for a credit card, or buy again in the future. A short sale on your credit report is much preferred to a foreclosure. A foreclosure on your credit is much like filing for bankruptcy.
Also, once your house goes into foreclosure, there is no guarantee that the bank won't come after you for your past due. This is called a deficiency judgment. Please see my other video about a deficiency judgment. To give you an idea of what you can expect a lender to require in terms of repayment when you instead opt for a short sale, you remain in control of the situation.
The bank owns the note attached to the title of your property. They dictate what they are willing to accept based on the amount of the. You are the owner of the record on the property and the one who can accept, reject, entertain, or respond to the offers on your property.
How It Works
Once an offer is accepted and then approved by the lender, the transaction proceeds and the realtor is in communication with the lender to get that sale to the closing table if all goes well.
The property is closed on and you the seller, will no longer have an obligation. You will sign a form saying that you short-sailed your property, and often the bank does not attempt to collect any further funds from you. Please know that the lender can forgive the balance or they can try to pursue a deficiency judgment.
In some cases, they will continue to communicate with you, the seller, through your realtor. Further, you may have to declare that short sale gain on your taxes, but you'll have to check with yours.
I'm here to help
One of the reasons I'm creating this video is because I helped mediate short sales and foreclosures 10 to 15 years ago.If you remember, that puts us around 2008. I dealt exclusively with owners who needed to short sale. It was really hard to watch good people suffer, but I was happy to help them get out of a situation in the best way possible, and it was nice to see their relief when it was all. I want to help people on Oahu avoid foreclosures at all costs, and if possible, let's try to avoid short sales too.
If you think you may be in this situation, please feel free to contact me and I can create a net sheet to let you know if you're underwater and we can come up with a plan. The good news is, You have options. While the circumstances might not be ideal, a short sale is often the best option if the property is worth less than the owner owes it.
I hope this helps you in your current situation. If you have any additional questions, you can always feel free to contact me. And for more information about real estate or oh Ahoo Living, please feel free to subscribe to my YouTube channel. Thank you! I'm Jill Ward with Century 21 Island Homes.