The short sale process truly is much like a normal home sale. You still list your home with a Realtor. You then market the property and reduce the price if necessary to get an offer. The big difference is that once you receive an offer on your home, the offer price must be approved by your lender. Once you get an offer, here is what happens:
- A Hardship Letter is drafted by you to send to your lender. This letter includes all financial difficulties that caused the short sale in the first place (divorce, job loss, medical issue, relocation, etc.) The lender can then research these items to make sure the short sale is on the up and up. Along with this Hardship Letter, bank statements, investment accounts, pay stubs and other financial records are also submitted to your lender. This entire package is called the Settlement package.
- Once your paperwork is received by your lender, they will review the settlement package and consider forgiving the remaining loan balance and all expenses. The expenses forgiven include property taxes, real estate commissions and other expenses associated with the closing.
- A Broker Priced Opinion (BPO) will then be ordered by your lender to examine the prices of the home in the market by looking at comparable sold homes to insure that the offer is in line. Please bear in mind that your lender will most likely consider something less than market value because they will be avoiding foreclosure with a short sale which is saving them time and money. So, often times a buyer can get a much better deal on a short sale too!!
- The lender then will review the purchase agreement and compare it to the BPO to determine if all is acceptable.
Although they are called short sales the process can be quite lengthy. You will definitely need a good real estate agent, experienced in selling homes short in addition to a lender willing to work with you on the loan and a buyer willing to wait out the process.
Sue Melhorn is a Realtor licensed to sell real estate in New Hampshire and Maine. Her primary service areas are Strafford and Rockingham counties in New Hampshire and York county in Maine. Sue is also Certified Distress Property Expert. She has both the training and expertise to help you sell or buy a home in today’s unpredictable real estate market. Most recently, Sue has been focusing on helping homeowners sell who owe more than their homes are worth. This type of sale is called a Short Sale. If you have questions about how short sales work or about any aspect of the real estate market today, please visit Sue at www.canwesellshort.com or www.seacoasthomesforyou.com.
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