Jeffrey Masich, Realtor, Certified Short Sale Negotiator (CSSN) explains Short Sales in Arizona. Click the image to learn more
What is a "Short Sale"?
What is a Short Sale?
A short sale is a real estate transaction in which the sales price is insufficient to pay the loan(s) encumbering the property in addition to the costs of sale and the seller is unable to pay the difference.
The “short” portion of the Short Sale definition addresses the bank’s willingness to release their lien or security interest in a home if it is being sold “short” or for less than the amount that the owner/borrower owes on the mortgage loan to the bank(s).
Can I short sale my home for less than is owed and be able to walk away from the remaining debt? In short, yes.
Jeff Masich will obtain a buyer for your home at the current market value and coordinate the sale with your bank for an amount "short" or for less than is owed. In normal situations this will result in a full release of your obligation to the bank.
"Upside Down" House is an opportunity for a Short Sale
My home is upside down, what can I do?
Many homeowners in Arizona are facing the difficult situation of a Foreclosure or a Short Sale. These homeowners wonder about the balance they will owe after the foreclosure or short sale.
Does the State of Arizona offer any protection for upside down homeowners?
Often homeowners/borrowers are not aware that Arizona is a "Non-Deficiency" State for short paid mortgages (Foreclosures and Short Sales). This means that, unless there are specific issues in a borrower's loan agreement, which an attorney can advise the borrower on, the lender is prohibited by Arizona Law Statue 33-729 from pursuing a judgment against the borrower if the home has sold for a deficiency. A deficiency is an amount less than the mortgage balance due to a diminished value of the home (or secured property).
House loan weighing you down? Consider a short sale
I am carrying a large mortgage debt on my back. How can a short sale help me?
To get an excellent education on the short sale process that will answer most questions that you will have, see the Short Sale Webinar and the "Short Sale Advisory" reviewing all of your options from the Arizona Department of Real Estate in the "Short Sale Help" section on this page.
The advantages of a short sale?
1. Homeowners often live in the home, rent free, during the process that the home is being sold and/or an offer and release of your debt is being negotiated with the bank.
2. Your credit although it will be negatively affected is better off than in a foreclosure. Often, sellers can re-apply in 2-3 years for a new loan if their other credit is kept up to date. The short sale is considered a mutual agreement settlement.
3. The difference between your loan(s) on the home and the amount the bank is shorted is negotiated and put in writing. In normal Arizona situations the Short Sale wiill result in a full write off by the bank of the balance of the shorted loan. Arizona is one of the non deficiency states, where in most situations, the lender cannot pursue the deficiency from the homeowner. The advantage on the short sale, is that when a homeowner leaves, the balance is dealt with and agreed to by both the borrower and their bank.
As with any financial transaction of this magnitude you should consult with your accountant and attorney.
Which path to take when considering a short sale?
Which path do I take?
1. Do Nothing 2. Loan modification 3. Face a forced foreclosure 4. Offer the bank a deed in lieu of foreclosure 5. Short Sale
See all of these options reviewed in more detail in the advisory found in the Short Sale Help section.
In either case, Short Sale or Foreclosure, the Arizona Law statutes protect the homeowner. Both will negatively affect the borrowers credit score. A Short Sale will allow the homeowner to re-apply (in most situations) for a new home loan sooner than on a foreclosure.
Specifically, Lenders are prohibited by Arizona Law Statute (33-729) from obtaining deficiency judgments in foreclosures where the land size is 2.5 acres or less and where the property was used as either a single one-family or single two-family dwelling. The actual language from the Arizona Statue follows:
Arizona Law: Statute 33-729. Purchase money mortgage; limitation on liability
A. Except as provided in subsection B, if a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary.
B. The balance due on a mortgage foreclosure judgment after sale of the mortgaged property shall constitute a lien against other property of the judgment debtor, general execution may be issued thereon, and the judgment may be otherwise satisfied out of other property of the judgment debtor, if the court determines, after sale upon special execution and upon written application and such notice to the judgment debtor as the court may require, that the sale price was less than the amount of the judgment because of diminution in the value of such real property while such property was in the ownership, possession, or control of the judgment debtor because of voluntary waste committed or permitted by the judgment debtor, not to exceed the amount of diminution in value as determined by such court.
Jeff Masich recommends that a professional licensed short sale negotiator shoud represent you and your Realtor in working out a full release of the deficiency in writing to allow you to have "peace of mind" that the lender will not pursue payment for the deficiency. The lender is prohibited by law from doing so. If a borrower/owner chooses to negotiate for themselves, it should be noted that if the borrower signs a separate note to he lender for the deficiency, that new note would govern the deficiency balance owed on the debt. The bank's have professional "Loss Mitigators" that try to maximize the bank's return on a short sale to avoid an even larger loss that is likely to occur in a foreclosure. A borrower/owner has the law behind them to have their own negotiator ask for a full release of the deficiency amount.
Jeff Masich recommends that a negotiator is selected that will be the advocate for his client in the Short Sale and will obtain a deficiency/lien release from the lender. Jeff Masich's goal is to get the house sold at market value, the negotiator's job is to get the release for the borrower on the deficiency.
Borrowers need to know that Arizona Law makes Arizona a "Non Deficiency" State. An attorney's advice should be obtained to determine if the borrower has a special situation outside of the Arizona Statute. Unless, the borrower feels that they have a committed responsibility to pay the deficiency or are trying to protect their credit rating the Short Sale Negotiator has the right to ask the lender for a full release under Arizona Statue 33-729 for the Short Sale of the home sold at market value by Jeff Masich and Arizona Homes and Land.
Selling in Arizona with a Short Sale to Avoid Foreclosure
Why would my bank allow me to sell my home in a Short Sale if their loan will not be paid in full?
The “short” sale definition addresses the bank’s willingness to release their lien or security interest in a home if it is being sold “short” or for less than the amount that the owner/borrower owes on the mortgage loan to the bank(s).
The negotiation in the short sale process has several major goals:
1. Owner/borrower looks to sell home for less than is owed and have the bank(s) release their lien on the property
2. Owner/borrower looks to protect their credit rating somewhat in a short sale as opposed to a foreclosure
3. Owner/borrower asks the bank, based on their financial hardship, to write off the balance owed or write off a portion of the balance owed after the short sale proceeds are paid to the bank
4. Bank looks to prevent a foreclosure, expecting the home to get a higher price with the owner taking care of the property. Many foreclosure properties are abused by angry owners. Conversely, a short sale property tends to be in better condition.
5. Listing agent or hired negotiator for owner/borrower presents offers received to the bank(s) negotiators and works on an exit strategy where the bank will write off the difference between the selling short sale price and the amount that the owner owes on the property.
How long is the Short Sale process?
Banks are backed up in the short sale negotiation area. Often they are in no rush to do anything. This allows the homeowner to continue living in the home while an offer from a buyer is obtained and the lender is assigning the case internally to their Loss Mitigator. This may take many months.
Ater a purchase contract is obtained from a buyer, the bank(s) (one or two) are negotiating with the owner/borrower for the owner to pay the difference or a portion of the difference between the sale price and the amount on the loan (the short amount). This negotiation is somewhat invisible to the prospective buyer, but is the main reason that the offer/purchase process can take so long (months). The owner's negotiator will present the purchase offer contract obtained by Jeff Masich with HomeSmart to the bank's Loss Mitigator. The negotiator will also address the hardship in relation to the Arizona statutes in order to obtain a full release for the seller from the bank(s).
Short Sale Help in Arizona
Resources for Consideration of a Short Sale in Arizona
Financial distress? Homeowner finance options through HOPE NOW, an alliance between counselors, mortgage companies, investors, and other mortgage market participants. Arizona Short Sale Advisory This advisory provides information on all choices available to a homeowner that owes more on their home than it is currently worth. These options include a Short Sale in addition to Foreclosure and Loan Modifications. A Short Sale is a real estate transaction in which the sales price is insufficient to pay the loan(s) encumbering the property in addition to the costs of sale and the seller is unable to pay the difference. A short sale involves numerous issues as well as legal and financial risks. This Advisory published by the Arizona Association of Realtors is designed to address some of these issues and risks.
Avoid foreclosure with a Short Sale in Arizona
How do I avoid the bank from foreclosing on my home?
You may want to first review the loan modification options that are available through the Federal government's Hope Now program. Another option and alternative is completing a deed in lieu of foreclosure transaction from your lender. Another is having your Realtor conduct a short sale. The lenders would probably prefer the Short Sale option as they tend to recover more funds on the home.
If going with a short sale , consider getting a short sale negotiator. A negotiator can answer your questions every step of the way and represent you vs. the bank's skilled loss mitigators. You have a professional looking out for your best interest that will strive to obtain an agreement in writing acknowledging that the bank will write off the deficiency amount (the difference between your loan balance and the amount the bank is "shorted" in the purchase from the new buyer).
You may select a negotiator on your own or work with a negotiator that works with Jeff Masich and Arizona Homes and Land.
Sold! After the short sale move on to your next home
How do I get started with the Short Sale of my home?
Contact Jeff Masich of Arizona Homes and Land. Jeff will get the home listed as a short sale and Jeff will keep you advised of the progress of the negotiations with your lender and the sale of your home as appropriate.
A short sale can take some time to close and you will be asked to provide documents as requested by the negotiator to be presented to your bank. Once the Short Sale listing is set up and registered with your bank, Jeff Masich will find a buyer for your home. Once the offer is received, the Short Sale negotiations start in earnest with the bank.
Once the offer is accepted by the bank, the sale will move through closing until your home is "SOLD"!
After the sale, you can work to move on with your life without the burden of the home's upside down debt and avoid foreclosure. Hopefully in a few years, you can consider purchasing a more modestly priced home.
Contact Jeff Masich on the form below or call Jeff with any questions that you have about avoiding foreclosure through your home's Short Sale in Scottsdale, Paradise Valley, Fountain Hills or the Phoenix metro area of Arizona.
Contact Jeffrey Masich for your Short Sale
Jeff will get started to walk you through the process discussed on this page. Feel free to ask Jeff any questions that you have.
Complete the form to tell Jeff about your home and add any special comments. Jeff will contact you right away.
Jeffrey Masich says, "Let me help you 'Short Sale' your home and remove the burden for your family"
"It is an honor to receive the referral of your friends and family"
Arizona Homes and Land Group with HomeSmart Jeffrey Masich, Associate Broker HomeSmart Moblie: 480-242-6500 Fax: 602-749-6509 Email: JeffMasich@ArizonaHomesLand.com
Associate Broker (License # BR632450000 State of Arizona) REALTOR® (National Association of Realtors) GRI (Graduate Realtor Institute) CSSN (Certified Short Sale Negotiator) MBA (Master Business Administration) BS (Bachelor Science- Accounting) CCE (Certified Credit Executive-former) CCM (Certified Cash Manager)