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Real
Estate Short Sales
The
Smarter Alternative to Foreclosure
 There
are many ways to lose a home. Foreclosure, which destroys
credit, embarrasses families and strips the owner of their dignity
is one of the hardest. For owners who can no longer afford
to keep their mortgage payments current, there are alternatives to
bankruptcy or foreclosure. One of these options is called a short
sale.
A short sale occurs when a property is sold (with the lender's
approval) for less than the loan balance, which releases the
owner's obligations to make their mortgage payments.
Not all lenders will accept a short sale or a discounted payoff,
especially if it would make more financial sense to
foreclose. However, many lenders are open to this option
because of the costs involved in foreclosure and re-marketing of
the property.
How Does it Work?
Every lender has their own requirements and policies when it
comes to accepting and processing short sales. As your
REALTOR®, I will help you prepare the documentation necessary to
apply for a short sale with your lender. If you are
having trouble making your mortgage payment due to increased
living expenses, decrease in income, loss of your job, divorce or
separation, medical bills, or an increasing loan payment,
please contact me
for a private, no-obligation consultation. You may qualify
to sell your home and get out of your mortgage for less than you
owe and without paying any real estate broker fees.
I have included some additional tips below.
- Call the Lender
You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the "real estate short sale" or "work out" department, you want the supervisor's name, the name of the individual capable of making a decision.
- 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
- 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, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.
- Hardship Letter
The sadder, the better. 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. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
- 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. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it 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 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.
- 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.
If you have
questions or need additional information about short sales, please
contact me.
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©2008
Christine Keller and