A Step by Step Guide To The Short Sale Process
A short sale takes place when a lender allows the borrower to sell the home for an amount that is less than the mortgage loan balance. Property owners normally have to prove that they are in a financial hardship before a lender will consider approving a short sale.
The following steps are involved in the short sale process:
1. The first step is to figure out whether the house can be sold for a sufficient amount of money in order to pay off the pending mortgage. A lender will want to see that you have tried to market the property before attempting to complete a short sale.
2. Before getting approved for a short sale, there must be documented proof of financial hardship. If you have plenty of assets and a steady income, it may be more difficult to get a short sale approval. It is essential that you ask the lender in advance what documentation is needed to apply for a short sale.
The basic documents required usually include:
- Hardship Letter
- List of Assets and Liabilities
- Current Bank Statements
- Current Pay Stubs
- Copies of the mortgage agreement.
- If you are employed, self or employer, you will be required to submit at least two years’ tax return statements.
3. Once proof of hardship has been submitted, it is a good idea to hire a professional Realtor to assist you in the short sales process. The Realtor must be licensed in your state and should be experienced in helping home owners in the short sale process. A savvy Realtor will develop a marketing plan for your property as well as assist you in the short sale negotiations.
4. The Realtor would organize showings to potential buyers and present the best possible offer in order to ensure that the short sale request is approved. If possible, have the listing contract state that the sale of the property is contingent on the approval of the lender. This will allow you to review offers from buyers even during the approval process.
5. Lastly, have the short sale package containing all necessary documents appropriately delivered to the lender. Some lenders prefer the documents to be hand delivered, faxed, or mailed directly to them. You can send in two packages through separate means to ensure that your application was received. Lenders spend a great deal of time reviewing short sales, but once the deal is approved they usually require that the buyer closes on the property within 30 – 45 days.
6. Follow up with the lender to confirm that your application was received and is being processed. Upon confirmation that your package was received, you will need to consistently follow-up with the lender to ensure that the short sale process is moving forward. Do not allow communications between you and the officer in charge of your case to go silent. If possible, you may hire an attorney to help speed your application through the process.
The short sale process can be tedious, confusing and at times aggravating. However, an experienced real estate professional will help guide you through the steps and alleviate unnecessary stress.
For more information on short sales and avoiding foreclosure go to our short sale help site: The Short Sale Mentors
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