The Process And Steps Of A Short Sale
In recent years short sale properties have become more prominent in the real estate business, in line with the burst in the housing bubble across the United States.
However, short sale could be a viable option for a seller who’s facing bankruptcy or even foreclosure.
In order to understand if short sale is a reliable option for you, consider speaking with a Realtor who can guide you through the process. If you are on the brink of foreclosure or have already filed for bankruptcy, you can talk to your attorney or find a real estate lawyer, who specializes in these types of cases.
During a short sale, your lender (bank or mortgage company), accepts a payment from the perspective buyer that is lower than the total amount do. However, it is important to understand that not all lenders accept short sale and certain properties don’t qualify. In certain instances, it makes more sense to move on with a foreclosure, so in that scenario a short sale no longer is a viable option.
There is a benefit to the housing market crisis: it has created a good buying environment for perspective home buyers. Whether they are simply looking to make a change in life, or they have been stashing away funds for that house down the block for more than 20 years, it really is, “a buyer’s market.” However, a lot of buyers do not understand that dealing with a short sale can be extremely stressful for a current home owner, who can’t afford to stay in their home sweet home. Whichever side of a short sale you might be on, you should consider the following tips.
Call An Attorney Who Is A Short Sale Expert
If you are the seller, the first step you should take is to contact a real estate attorney, that is well versed in the subject of short sale. He/She can explain specific short sale options and particular tax ramifications. They can also help determine what other home buying options down the road (even after short sale!) you might have based on your financial situation.
Even though mortgage companies and lenders have a range of requirements, they usually expect the borrower submit a substantial amount of documentation. Below is a small break down of what you can expect.
Call The Lender – Find Out Who Is Handling Short Sale
If you are a seller, you might have to make a handful of calls before you actually find the person that is handling the short sale. Keep in mind that you want to go directly to the source. You will want to track down the name of the supervisor. If they are unavailable, leave a voice-message. Do not get bumped around from department to department, as this will only push you away from the person that is responsible for the sale.
Short Sale Authorization Letter
Usually, lenders won’t disclose any information unless you produce written consent. If you are working with an attorney or a realtor, you could streamline the communication process by writing a letter directly to the lender, giving them permission to discuss the extent of the loan. Keep in mind that the letter should incorporate the following information: loan number, property address, your name and both your realtor’s and your lawyer’s contact information.
Hardship Letter Will Help Your Plea For Short Sale
You should provide a hardship letter that lays out your personal dilemma. The statement describes what got you into a financial crunch, while also making a plea to see if the specific lender can accept an offer that is lower than the full payment. In some cases, lenders are will understand if you lost your job, were in a serious vehicle collision, or got ill. It would be helpful to be honest and forward about your situation, so the lender can work with you personally.
Bank Statements
Be prepared to review your bank statement with the lender. If your statements include substantial cash withdrawals and deposits that are unaccountable, this can serve as a red flag. The lender may also ask you to provide a line by line breakdown of each deposit to determine whether more income will be coming in.
Get Market Analysis – List Your Home
It is also important to keep in mind that property values can fluctuate, depending on the location and the general state of an economy. The term Comparative Market Analysis, also referred to as a CMA, displays the prices of homes that are similar and are either being actively marketed “For Sale” or have been sold within the past 6 months. Obtaining a copy of this analysis can potentially show a lender that you have been directly affected from market conditions. If the lender sees that you are not responsible for your home sitting idle on the market, although priced correctly, this can work to your benefit.
Final Sales Agreement
If you are a seller, once your Realtor has negotiated a fair agreement to finally sell the home to a prospective buyer, the lender or financial institution will request copies of both the offer and listing agreement.
If you are a buyer you might be able to possibly renegotiate some of the items related to home inspection. Be prepared to provide the seller’s lender with your letter of pre-approval, or proof of funds if you are planning to pay cash.
Seller – once you complete all these steps you will be ready to walk away from a short sale.
Whichever side of a short sale you are on, seller, looking to move on with your life, or buyer, looking to acquire a property at a discount price, I will be honored and privileged to help