If you’re struggling to make mortgage payments on your Massachusetts home and don’t want to go through foreclosure, a short sale could be an option for you. A short sale is when you sell your home for less than what you owe on the mortgage, with the lender’s approval. While the process can be complex, it’s often less damaging to your credit score than a foreclosure. In this post, we’ll walk you through the steps to do a short sale on a home in Massachusetts, including state-specific laws and references.
What is a short sale?
A short sale in Massachusetts is a real estate transaction where a homeowner sells their property for less than the amount owed on their mortgage with the approval of their lender. This process can help the homeowner avoid foreclosure and may be a viable option for those who are unable to keep up with their mortgage payments. The short sale process involves contacting the lender, finding an experienced real estate agent, determining the value of the property, listing the property for sale, and negotiating with the lender to accept an offer that is less than the outstanding mortgage balance.
Most common reasons a short sale is required
Below are are some of the most common reasons why homeowners in Massachusetts may require a short sale.
- Financial hardship such as job loss, illness, or divorce
- Inability to keep up with mortgage payments due to high interest rates or adjustable-rate mortgages
- Property values decreasing, resulting in negative equity
- Inheritance of a property with an outstanding mortgage balance
- Relocation or the need to downsize
- Property damage or repairs needed that the homeowner cannot afford to make
- Unexpected life events, such as a death in the family or a natural disaster, that affect the homeowner’s ability to make mortgage payments
- Legal issues, such as liens or judgments, that create financial difficulties for the homeowner
- Over-leveraging or taking on too much debt, resulting in an inability to keep up with mortgage payments
- A change in financial circumstances, such as a reduction in income, that makes it difficult to pay the mortgage.
How to do a short sale on a home in Massachusetts
To perform a short sale, below is a summary of the steps to be aware of:
- Determine if you qualify for a short sale: Before you begin the short sale process, you need to determine if you qualify. You may qualify for a short sale if you owe more on your mortgage than your home is worth, you have a financial hardship (such as job loss or illness), and you’re unable to make your mortgage payments. Contact your lender to discuss your options.
- Find a short sale real estate agent: Not all real estate agents are experienced in short sales. You’ll want to find an agent who has a proven track record of successfully negotiating short sales. They can guide you through the process, help you set a price for your home, and work with your lender to negotiate the sale.
- List your home for sale: Once you’ve found a real estate agent, you’ll need to list your home for sale. Your agent will help you set a price that’s reasonable and attractive to buyers. Keep in mind that your lender will have to approve the sale price, so you’ll want to avoid setting a price that’s too low.
- Accept an offer and submit to your lender: Once you’ve received an offer on your home, you’ll need to submit it to your lender for approval. Your lender will review the offer and may ask for additional information. They’ll also order an appraisal to determine the market value of your home. If your lender approves the sale, they’ll issue a short sale approval letter.
- Close the sale: Once you have short sale approval, you can proceed with closing the sale. The buyer will typically have a certain amount of time to complete their due diligence and secure financing. Once everything is in order, you’ll close the sale and the proceeds will be used to pay off your mortgage.
Massachusetts Short Sale Laws
In Massachusetts, there are several laws that apply to short sales. For example, under Massachusetts law, a lender can’t pursue a deficiency judgment against the borrower if the short sale is completed. A deficiency judgment is when the lender seeks to recover the difference between the sale price and the amount owed on the mortgage. Additionally, in Massachusetts, if the lender agrees to the short sale, they can’t go after the borrower for the remaining balance of the mortgage.
Benefits of Selling Your Home to a Cash Home Buyer During a Short Sale
While a short sale can be a good option for some homeowners, it’s not always the best choice. One alternative is to sell your home to a cash home buyer. Here are some of the benefits of selling your home to a cash home buyer during a short sale:
- Faster closing: Cash home buyers can often close on a sale within days, rather than weeks or months.
- No need to list your home: When you sell to a cash home buyer, you don’t need to list your home for sale or deal with showings and open houses.
- No repairs or renovations: Cash home buyers will typically buy your home as-is, without requiring any repairs or renovations.
- No commissions or fees: When you sell to a cash home buyer, you don’t need to pay real estate agent commissions or closing costs.
In conclusion, a short sale can be a good option if you’re struggling to make mortgage payments on your Massachusetts home. By following these steps and working with an experienced real estate agent, you can navigate the process successfully. However, if a short sale isn’t the right option for you, selling your home to a cash home buyer can be a great alternative. Be sure to weigh your options carefully and choose the path that’s best for your unique situation.