Short Sales and Foreclosure
If you owe more than the house is worth, there are more options than most people are told.
Start with where you actually stand
If you are behind on payments or you owe more than the house is worth, the worst thing you can do is nothing. Options narrow as the timeline advances, and the earliest options are the best ones.
I worked short sales through the 2009 to 2012 downturn, when a large share of the Bay Area was in exactly this position. It is not a situation I am learning on your file.
What the options generally are
Depending on your circumstances there may be several paths, and which ones are open depends on your lender, your loan, your equity position and how far along any process has gone.
A short sale is where the lender agrees to accept less than the balance owed so the property can be sold. It requires the lender's approval, it runs on their timeline rather than a normal one, and it takes longer than a standard sale.
Sometimes the honest answer is that you are not underwater at all. Bay Area values have moved a great deal, and people occasionally assume they owe more than the house is worth when the opposite is true. That is a good conversation to have.
Some options are financial or legal rather than real estate: loan modification, forbearance, or bankruptcy protection. Those belong with a lender, a HUD-approved housing counselor or an attorney. I am none of those, and I will tell you when you need one rather than pretending otherwise.
Lender timelines run differently
This is the practical thing to understand. A short sale does not move at the speed of a normal transaction. The lender has to review and approve, and that review takes as long as it takes.
Buyers have to be told that up front, because a buyer who expected a thirty day close and discovers a four month one walks away. Setting that expectation correctly at the start is a large part of why these deals succeed or fail.
Handled quietly
Nobody wants this on display. There is no judgment involved from my side, and there is no version of this where I make you explain how you got here.
The first conversation costs nothing and commits you to nothing. Call or text (415) 305-6708. You can do all of it in English or Russian.
This describes a general approach. It is not legal, tax or financial advice, and a situation like this usually needs at least one of those professionals alongside me.
Frequently Asked Questions
How long does a short sale take?
Longer than a standard sale, because it runs on the lender's approval timeline rather than yours. Setting that expectation with buyers at the start is a large part of why these transactions do or do not close.
Will a short sale affect my credit?
It can, and how much depends on your circumstances and your lender. That is a question for a HUD-approved housing counselor or an attorney rather than for me, and I will point you toward one.
What if I am not actually underwater?
That happens more than you would think, because Bay Area values have moved a lot. Finding out where you really stand is free and it is the right first step.
Keep exploring
Ready to make your move with Kate Fomina?