I had a call today from a borrower and homeowner who is about ready to list his home as a short sale. I know that this has been a really tough decision for him. I have tried to advise him for several months as to the road to take for a successful loan modification. Unfortunately, based on circumstances beyond his control, he was unsuccessful in obtaining the loan modification. So, it seems that this homeowner is about ready to embrace the short sale transaction.
It’s hard to come to such a decision. In this case, this borrower had put down 30% in order to purchase the home. And, to think that this money is now gone forever is tough to accept. So, this borrower wants to know what the next steps would be.
I have often been accused of writing posts and articles that get into the complexities of the short sale. This time however, I am simply going to address exactly what needs to happen when you make the decision to list your home for short sale.
Once you have decided that you are going to participate in a short sale, you will need to hire a qualified Realtor® to list your property. This Realtor® will put your home on the market and advertise to find a buyer.
In the mean time, you (the seller/borrower) will need to put together a bunch of information that the Realtor® will need to submit to the bank. This information includes pay stubs, tax returns, bank statements, a hardship letter, and a financial statement. The listing agent will also ask you for copies of your mortgage statements for all of the mortgages attached to the property.
After an offer is obtained for the property, the listing agent (or the individual processing the short sale on behalf of the listing agent) will then submit all of the paperwork listed above (often referred to as the short sale package), the offer, and a number of other items to the mortgage lender or lenders. At this time, the short sale process will begin.
One important thing to keep in mind is that buyers may not be lined up around the block to purchase your home the moment that the listing agent puts it on the market. With that in mind, do not wait until the sheriff is at your door to list your property as a short sale. If you have missed more than a few payments, the bank may be poised to foreclose very soon.
Putting your property on the market as a short sale is a tough decision, and sometimes people want to avoid making tough decisions. Once you are certain that a short sale is right for you, act quickly because time is of the essence.
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