What is a Short Sale?
This is an arrangement with your lender where they will allow you to sell your property for less than the amount of the current mortgage. Although the process is long and may require some hard work, a short sale is a way to sell your home before it goes into foreclosure.
A Short Sale Example:
Steps to a Short Sale
Contact your CPA and Attorney
There could be tax ramifications when selling your home as a short sale and it is important you understand the potential risks.
Call the Lender
You may need to make several phone calls before you find the right person responsible for handling short sales. You need to speak with a supervisor, the person capable of making a decision on your loan. It may be helpful to know that if you are able to pay your monthly mortgage amount on time, the bank will not accept a short sale.
Submit Letter of Authorization
Lenders typically do not want to disclose any of your personal information without written authorization to do so. When working with us as your real estate agent, you will receive better cooperation if you write a letter to the lender giving them permission to speak with us about your loan.
Preliminary Net Sheet
This is an estimated closing statement that shows the sale price you expect to receive and the costs associated with the sale, unpaid loan balances, outstanding mortgage payments due and late fees, including real estate commissions. Your attorney should be able to prepare this for you.
This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment.
Proof of Income and Assets
It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, cash, other real estate, or anything of tangible value. They will also want tax returns, pay stubs, and bank statements. Lenders often require assurance that the debtor cannot pay back any of the debt that is forgiving.
Copies of Bank Statements
If your bank statements reflect unaccountable deposits, large cash withdrawals, or an unusual number of checks, it’s probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
Comparative Market Analysis
Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a CMA. Realty Shop & Property Management can prepare a CMA for you to help derive a fair list price.
Once you receive an offer on your home, you will need to submit the contract to your lender. It may take some time for the lender to respond, but if all goes well they may approve your short sale.