If you know someone who is considering a short sale, and they have their loan with Chase or Bank of America, there’s good news. Both banks have launched a national program that pays significant cash incentives to encourage sellers to do a short sale and avoid foreclosure.
In the past few months we have seen homeowners receive checks from their lender at closing in amounts that range from $23,000 to $30,000. And these large incentives are not restricted to owners of high-end properties. Last month, the owner of a short sale property that sold for $200,000 received a check for $30,000. The checks are given for relocation assistance and can be used however the homeowner sees fit. There are no restrictions.
Bank of America has outlined several criteria for homeowners to qualify:
- Your loan has to be owned and serviced by Bank of America.
- You must participate in one of the pre-approved price short sale programs, such as HAFA (Home Affordable Foreclosure Alternatives) or Bank of America’s proprietary program. You can find out more about participating in HAFA here.
- Your short sale must close by September 26, 2013.
Bank of America is also offering to appraise the value of the property prior to listing and provide a pre-approved listing price. This takes the guesswork out of wondering whether an offer from a buyer meets the bank’s price criteria.
At this time, Chase is reviewing qualifications for incentives on a case-by-case basis.
So why are banks doing this? You may have read about the high number of foreclosures around the country. It is expensive for a bank to go through the foreclosure process. And unless the property sells at auction on the courthouse steps, the bank ends up owning it. That means more expense to insure the property, maintain it, and get it ready to be sold. We believe that lenders are looking for ways to persuade sellers to opt for a short sale rather than add yet another foreclosure to the bank’s already overloaded inventory.
It’s important to note that the seller incentive is determined by the investor, so not every seller with a Chase or Bank of America loan will receive an incentive. However, if someone is considering a short sale, it’s a good time to ask your real estate agent if you qualify. At a time when most short sale sellers are struggling financially, these cash incentives offer a great start on setting up a new household.
Richard is a Windermere broker in Bellevue, WA and co-founder of Washington Property Solutions, a short sales negotiating company. Since 2003 he has helped more than 700 homeowners sell their homes. A Bellevue native and a University of Washington grad, Richard is an avid sports fan and a devoted Little League and basketball coach. You can learn more about Richard here or at www.washortsales.com.