A “short sale” is a situation in which the seller owes more money on the loan than the sale of his property is likely to produce on the market, and the seller is unable to bring money to closing (to make up the difference).
Questions for distressed homeowners considering a Short Sale:
1. Has homeowner pursued all options with his bank, such as Refinance, Sell and bring cash to closing, Lender Workout options, Short Sale, Deed in lieu of foreclosure, Foreclosure?
If yes, and Short Sale is the best option:
2. How many mortgages are on the property and with whom are they with?
3. When did homeowner make his last mortgage payment?
4. What are the current balances (payoffs) on each mortgage?
5. Who are contact persons at the banks?
6. Are the banks willing to entertain a short sale? If so, will they provide a short sale payoff application (in advance of receiving an offer)?
7. Are there any other liens on the property?
(such as child support lien, tax lien, HOA lien, etc?) 8. What is seller’s estimated net equity?
9. Who is the homeowner’s attorney?
The homeowner needs to work with his real estate agent to list the property for sale. Once a ready, willing and able buyer makes an offer on the property and a contract is created by both Buyer and Seller, the seller must submit the contract to the lender for approval, along with a Short Sale Package, which includes the following 9 elements:
(Prepared by real estate agent and homeowner; must be prepared for each lender with a loan on the property)
1. Short Sale Proposal Letter
2. Borrower’s Signed Short Sale Payoff Application
3. Seller’s Hardship Letter
4. Supporting Hardship Information
5. Seller’s financial information
6. Comparative Market Analysis
7. Marketing History
8. Repair Estimate for the Property
9. Purchase Contract, HUD-1 Settlement Statement and Buyer’s Preapproval Letter
This is only a brief overview, so please feel free to contact me for more details. Short sales have a reputation of being lengthy, frustrating and time-consuming…in many cases, they are, but if you know the process and the parties involved, short sales can be smooth, win-win situations for sellers and buyers. Whether you are selling your home as a short sale or interested in buying one of the many short sales on the market, I can help explain the process and manage expectations on this increasingly popular real estate transaction.
