A short sale occurs when a homeowner sells their property at an amount lower than the mortgage due. Since it's better than getting your home foreclosed, you may opt to take this route if you’re no longer able to pay your mortgage. Like other short-sellers, you may have questions about the fees associated with this type of sale.
The closing costs for Charlotte, NC short sales vary. For buyers, the typical range is 7% to 8% of the property's final price. Sellers pay a cheaper cost, though they need to settle the short sale agent's commission fee beforehand. The amount ranges from 4% to 6% of the agreed price.
Read on to learn more about short sales - and the fees that come with them.
What Is a Short Sale, and How Does It Work?
Short selling means putting your Charlotte, NC home on the market with a price below your remaining mortgage balance.
You will likely be doing this because you are unable to keep up with your mortgage anymore. This may be due to illness, divorce, or the death of the primary payor.
Depending on your lender, a short sale may forgive the debt you have.
On the other hand, your lender may file for a deficiency judgment. If this happens, the seller must pay the difference between the sale and mortgage amount.
What Are the Pros and Cons of a Short Sale?
A short sale is a ‘voluntary’ way of selling your home. Its benefits and disadvantages are often compared to a foreclosure. With the latter, the home is closed ‘involuntarily.’
Pros of a Short Sale
‘Lesser’ Credit Impact Compared to Foreclosure
Compared to a foreclosure, a short sale will not hurt your credit that much.
This ‘settled debt’ or ‘negotiated settlement’ will stay for seven years. But as long as you manage your credit, you can reduce this to a mere two years.
Foreclosure, on the other hand, will leave a stain on your credit report for a decade.
Faster Access to a Loan
If your financial situation improves after the short sale, , you can get a loan right away.
Veterans can get a VA loan after two years, subject to exceptions.
If you aren’t ex-military, you can get a conventional loan within the same time frame. However, you may have to wait for up to four years. Like the VA loan, it’s also subject to exceptions.
As for a Federal Housing Administration or USDA loan, you will need to wait three years.
Getting any of these loans would be more challenging if your home were foreclosed. Depending on your case, you may have to wait for as long as eight years.
You Don’t Have to Vacate Your Home Right Away
You can stay in your Charlotte, NC home up until the sale is closed. You don’t have to worry about being homeless while waiting for an offer.
Benefits Buyers and Lenders as Well
The pros of a short sale are not limited to the seller, though.
For the buyer, it means buying a home for a lower price. They don't have to deal with foreclosed homes, which can be a hassle to purchase.
As for the lender, a short sale can help minimize some headaches. Although it comes with losses, it's more straightforward than a foreclosure.
Cons of a Short Sale
Seller Has No Say in the Sale
Since the lender is in charge of the sale, the seller doesn't have much say in the process. They will negotiate the price, time frame, and whether or not the sale should push through.
Lengthy Processing Time
There are many steps involved in a short sale, which I will discuss below. This means the short sale process can take several months. It can take more if you don’t have a top real estate agent to assist you.
The Lender Can Come After You
Unless you sign a contract that absolves you of indebtedness, the lender can file a case against you.
To avoid this consequence, make sure to seek the help of a Charlotte, NC short sale realtor. Nancy Braun and her staff of 50 licensed experts can help you with this undertaking.
How Much Are Closing Costs in Charlotte, NC?
Closing costs are the fees you need to pay to a third party, such as Showcase Realty. This is in exchange for the services they have provided, either to the seller or the buyer.
As the buyer, you need to pay an amount equivalent to 7% to 8% of the final price. As a seller, you have to pay a lower cost. However, you will also need to shoulder the short sale agent’s commission. This equates to 4% to 6% of the final price.
Here are the other costs included in the closing fees:
Prorated Property Tax
This tax, which is prorated between you and the buyer, corresponds to the days you owned your property. It is calculated annually. The amount for the year depends on the date you sell your Charlotte, NC property.
You have to pay additional mortgage fees in case you haven't paid the total amount.
This is the payment for the owner’s title policy. The buyer, on the other hand, will shoulder the lender’s title policy.
Attorney’s Closing Fee
This is the payment for the lawyer’s services. The buyer and seller may have different representatives. However, most transactions only use one attorney.
This is the payment for the entity that held the fund in escrow. There is no set amount for this, as this will always depend on the company.
Homeowners Association (HOA) Transfer Fee
If the property is part of an HOA, you will need to pay a fee that's prorated between you and the buyer. The cost will cover document preparation and distribution services.
Also known as the recording fee, it covers the cost of transactions, couriers, etc.
Are Closing Costs Cheaper if You Pay Cash?
Closing costs are cheaper if you pay cash because you don’t have to pay a lawyer for the mortgage.
Likewise, you don’t have to pay for escrow, mortgage application, or loan origination. There’s also no need to pay for appraisals that mortgage lenders require.
If you don't have cash at hand, you don't have to worry. Charlotte NC short sale agents will deduct the fees from your profits. They'll also discuss the costs beforehand, so you won't be taken aback by the prices you have to pay.
In a #ShortSale, you'll need to provide all your financial information with your agent, including all those overdue notices and other unpleasant collection documents, in addition to a hardship letter. https://t.co/K9qnkPmr5v pic.twitter.com/KZUQ0SQUl9— Showcase Realty (@ShowcaseRealty) August 19, 2021
What Do You Need to Know About Short Selling?
Now that you know what a short sale is - and the costs it entails - then you might be eager to start with the process.
For a seamless experience, here’s everything you need to know about short selling:
1. You Need to Qualify for a Charlotte, NC Short Sale
You have to be eligible to short sell your home. That means:
Your Home Is Underwater or Upside Down.
Don't take this literally, though! An underwater property means your home's worth is lower than your loan balance.
A top real estate agent, Nancy Braun, can help you by providing a home valuation - for free!
Your Mortgage Is in Default (Or Almost There)
Maybe you have considered options such as loan modification but to no avail. In this case, a short sale may be your best choice.
You’re in Financial Distress
You can prove this by submitting a letter of hardship, which details why you need to short-sell your home. Eligible circumstances include death, illness, divorce, or job loss.
Charlotte, NC short sale agents may also ask about the following:
2. Get the Value of Your Charlotte, NC Property
You will need a top real estate agent to determine your property's value. They do this by preparing a comparative market analysis (CMA.)
Your agent will compare your property to something with similar features.
If your home is in a ‘cool’ market, your agent may revert to a formal appraisal.
Depending on the lender, they may undertake their own CMA too.
3. Prepare the Needed Documents
Apart from the CMA, you will need to prepare these documents:
4. Submit the Short Sale Package
It will take the lender ten days to a month to acknowledge receipt of your package.
5. Wait for the Evaluation
The bank will assign a negotiator to your case. Unfortunately, this can take up to a month.
The broker will then proceed with creating a broker price option. This is an educated report of your home’s value.
If needed, a second broker will be assigned to your case. Again, this will usually take another 30 days.
Once the file is finished, it will be submitted for review. This process can take you another month, give or take.
6. Proceed With Selling Your Home
With the help of a Charlotte, NC short sale agent, you may finally proceed with selling your home.
Compared to the traditional process, however, it’s the lender who will be approving the offer.
Once the lender accepts the buyer’s price, the bank will send you a notice of approval. If not, they will send the buyer an outline of the terms they prefer.
Note: The bank may require you and your buyer will need to sign an arm’s length affidavit. This ensures that both parties don’t know or have any prior relationship with each other.
7. Close the Sale
With the contract approved, the short sale can be completed.
The home will be transferred to the buyer, while the lender will receive all the proceeds.
This means that the seller will finally be free of the loan unless given a deficiency judgment.
How Long Does It Take To Close On a Short Sale?
Charlotte NC short sales take an average of three to four months.
They can last longer, however, because of the following factors:
As mentioned, you will need to submit a variety of documents. The duration of the sale will depend on how fast you complete them.
The lender will need to have your home appraised and valued. It may take the bank some time to schedule this.
As mentioned, assigning a broker to do it can take a month. If they require a second broker, you’ll need to wait another month.
This will expectedly lead to some delays in short selling.
Finding a Buyer and Assessing the Offer
Even if you’ve managed to find a buyer right away, you will need to wait for the lender’s approval.
For one, they need to assess the offer. If they're happy with the price, then the short sale can go forward. But if they're not, they will need to negotiate with the buyer, which again takes time.
If the lender declines the offer, the seller must repeat the process and find a buyer again.
As with any other Showcase Realty deal, sellers will need to wait for the escrow period to lapse. This will take about four weeks.
If the agent isn't knowledgeable about short sales, expect the process to take a long time. #CharlotteShortSaleAgents #ShortSaleAgentsInCharlotteNC #NancyBraun #ShowcaseRealityhttps://t.co/8bfUiObLuG pic.twitter.com/5PsNmogerq— Showcase Realty (@ShowcaseRealty) August 23, 2021
How to Speed Up the Short Sale Process
Although Charlotte, NC short sales take some time, you can speed it up when you:
Prepare All the Documents
You will need to submit a lot of paperwork in the process, so you should have them all ready.
Remember, the processing time takes about ten days. If your application is missing any documents, you will need to wait another ten days before your new package is accepted.
Disclose All the Property Issues
If you've been living in your Charlotte, NC home for quite some time, then it's normal for it to have some problems. While you don't need to fix them, you do need to inform the buyers. If not, they may abandon you right at the appraisal stage.
Hiring the Best Real Estate Agent in Charlotte, NC
Without professional assistance, the process may take as much as 6-12 months.
A short sale agent, with their knowledge and expertise, can speed things up. Since they’re familiar with Charlotte, NC, they can help you find a buyer quickly.
This is why Nancy Braun real estate has a stellar reputation. They give buyers the confidence to place short sale offers. They can market your home to get as many offers as possible. Add to that, they can keep the buyers interested throughout the short sale process. Showcase Realty agents are familiar with the policies of the four major banks. Because they have mastered these processes, they can help cut a chunk of the usual wait time.
A short sale involves selling a property at a price below the remaining mortgage amount. It can take three to four months, though it can drag for about a year without professional assistance.
In Charlotte, NC, short sale closing costs range from 7% to 8% for the buyer.
Sellers have to pay a lower amount, though they must shoulder the agent’s commission rate of 4% to 6%.
Closing costs include various fees, such as property tax, mortgage interest, title insurance, etc.
If you’re looking to short-sell your home, seek the help of Nancy Braun and Showcase Realty. With their expertise, they can speed up the process - and cut your potential losses!