Postcard shadow

It's very common in today's depressed real estate market for home sellers to receive offers that are less than the amount owed to the lender. A short sale is simply selling your home for less than the sum total of your mortgage balance(s). Of course your lender must agree to a short sale and many more of them are realizing that it is in their best interest to do so.

Behind the bank's decision to accept a short sale are scrutinized values such as, repair costs, Realtor commissions, and holding costs. Some other factors include:

  • Does the homeowner deserve a short sale? If the property owner makes a substantial amount of "verified" income, there is a problem.
  • Is it in the bank's best interest to take a short sale or foreclose on the house and sell it through a Real Estate Broker?
  • How many properties does the lender currently have in default?
  • How flexible is the investor backing this loan?
  • Is a third party servicing this loan?
  • What is the demeanor of the bank representative in loss mitigation with whom you are dealing?

    To get a short sale approved you will be required to provide the lender information very similar to that required for a loan modification. They will likely issue you what is referred to a "Short Sale Package."

    A short sale package is generally comprised of the following:

    1. Cover Letter
    The cover letter needs to be clear and concise. The information is an overview of your situation: what do you owe on the property, what is its real value, and be sure to mention any needed repairs. A sample letter has been provided on the CD.

    2. Seller's Hardship Letter
    This letter should be at least a page long. The goal is for you to explain your situation to the bank. You should include items such as job loss, medical issues, divorce, health issues and other circumstances that have compounded your hardship. If the seller is considering bankruptcy include that information as well.

    3. Seller's Financial Information
    The purpose of this form is to educate the bank on what money you have coming in and going out on a daily basis. The bank would also like to know what monthly expenses and assets you have.

    4. Supporting Hardship Info
    You want to document further hardship issues that can substantiate your position. This would include items, such as medical bills, accident reports, layoff notice and the like.

    5. Broker's Price Opinion
    This document gives an approximate value of the home's current worth so the bank can determine the difference between the current loan(s) and the market value.

    A short sale will damage your credit less than a foreclosure and can be a very viable option. You can generally remain in your home during the short sale process and if an NOD has been filed you're more than likely not making your mortgage payment. It is important to save during this time for relocation expenses.

    If you choose to sell your home via a short sale it will behoove you greatly to find a qualified Realtor that is experienced in short sales. A qualified Realtor will handle the entire process for you including setting the price, listing your home, procuring the buyer and negotiating with your lender. Retaining such services renders your need to understand all the intricacies of a short sale somewhat moot. Contact us for help with your short sale today.

    TAKE ACTION NOW and contact us today for your personalized foreclosure prevention consultation.

    The information contained in this report is deemed to be accurate but is not guaranteed.
    Sources: "The Foreclosure Bible" and the California Association of Realtors