8 Steps to a Successful Short Sale

A short sale in real estate is not always a pleasant transaction.

There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings.

Short Sales are the best way to prevent foreclosure.

When lenders agree to do a short sale in real estate, it means the lender is willing to accepting less than the total amount due. Remember not all homeowners can qualify for short sales. Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.

    1. Call the Lender
      You may need to make a half dozen phone calls before you find the person responsible for handling short sales.
    2. Submit Letter of Authorization
      Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:
      • Property Address
      • Loan Reference Number
      • Your Name
      • The Date
      • Your Agent’s Name & Contact Information
    3. Preliminary Net Sheet
      This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions.
    4. Hardship Letter
      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.
    5. 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, negotiable instruments, cash or other real estate or anything of tangible value.
    6. 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.
    7. 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 comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes:
      • Active on the market
      • Pending sales
      • Solds from the past six months.
    8. Purchase Agreement & Listing Agreement
      When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.

 

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