What to Do When Your Sale Price Leaves You Short
If you're thinking of selling your home, and you expect that the total amount you owe on your mortgage will be greater 
than the selling price of your home, you may be facing a short sale. A short sale is where the net proceeds from the sale won't cover your total mortgage obligation and closing costs, and you don't have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it. How do you know if you qualify for a short sale?
than the selling price of your home, you may be facing a short sale. A short sale is where the net proceeds from the sale won't cover your total mortgage obligation and closing costs, and you don't have other sources of money to cover the deficiency. A short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it. How do you know if you qualify for a short sale? · Your property is worth less than the total mortgage you owe on it.
· You have a financial hardship, such as a job loss or major medical bills.
· You have contacted your lender and they are willing to entertain a short sale.
· You have a financial hardship, such as a job loss or major medical bills.
· You have contacted your lender and they are willing to entertain a short sale.
If this is your situation, your first order of business is to hire a qualified real estate team. You should look for prior short-
sale experience and if possible, choose a CDPE ( Certified Distressed Property Expert). You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won't try to take advantage of your situation or pressure you to do something that isn't in your best interest.
sale experience and if possible, choose a CDPE ( Certified Distressed Property Expert). You want to work with those who demonstrate a thorough working knowledge of the short-sale process and who won't try to take advantage of your situation or pressure you to do something that isn't in your best interest.A qualified real estate professional can:
· Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).
· Help you set an appropriate listing price for your home, market the home, and get it sold.
· Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
· Ease the process of working with your lender or lenders.
· Negotiate the contract with the buyers.
· Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.
· Help you set an appropriate listing price for your home, market the home, and get it sold.
· Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
· Ease the process of working with your lender or lenders.
· Negotiate the contract with the buyers.
· Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.
After you have chosed your real estate professional, begin gathering documentation before any offers come in. Your lender will give you a list of documents it requires to consider a short sale. The short-sale “package” that accompanies any offer typically must include
· A hardship letter detailing your financial situation and why you need the short sale
· A copy of the purchase contract and listing agreement
· Proof of your income and assets
· Copies of your federal income tax returns for the past two years
· A copy of the purchase contract and listing agreement
· Proof of your income and assets
· Copies of your federal income tax returns for the past two years
Be prepared for a lengthy waiting period. Even if you're well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package can take several weeks to months.
When the bank does respond, it can approve the short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate professional, with your authorization, can work your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)
Keep in mind, a short sale will impact your credit score less than foreclosure and bankruptcy. It is well worth the effort. If you are considering a short sale on your home, contact us today for a free consultation.
Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.
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