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Short Sales - An Attorney's Perspective

By
Real Estate Agent with Coldwell Banker United, REALTORS

In today's real estate market, there isn't a straight answer for most situations.  Not only are you learning along the way during a real estate short sale, but so are the real estate agents, bankers and sellers.  Here is an important checklist of issues buyers and sellers need to consider when purchasing or listing a short sale property.

 

Short Sale Listings:

Setting a good and comparable listing price for a short sale is quite important to attract the right buyers and bring an offer quickly to the lender. Choosing an expert real estate professional that has dealt with short sales can be quite beneficial.

The buyer must put together all the information requested by the lender that is required for short sale consideration:

1) A hardship letter that honestly describes how the situation was entered - the more details the better and include any supporting evidence of the hardship to further prove to the bank.

2) Include the last few months of pay stubs.

3) Include the last few months of bank statements, last 2 years of tax returns, and last 2 years of W-2 statements.

4) Also, complete a financial statement showing the detailed incomes and expenses.

 

The Listing Agent:

1) Must provide a CMA to support the listing sale price

2) Must keep track of all the activities related to the transaction to be on top of all the parties involved. They also must stay in good communication with sellers and the lenders.

3) It is also helpful to have a list of items that detract from the properties value, along with verifiable proof.  Take pictures of any repairs to the house, any houses on the street that may be a drag to housing prices, and provide rough estimates of what it may cost to make the property otherwise 100% sellable.

 

The Title Company:

1) Needs to estimate the closing related expenses such as any tax liens, judgments, commissions, lien search fee and more.

2) Preliminary HUD

 

Buying a Short Sale:

A short sale may appear like a regular transaction but the short sale timeline is quite an obstacle for many involved. It definitely requires a lot of follow up and consistent communication. Once the seller and buyer are delivered written approval by the bank or lender on the short sale, things can move very quickly.

 

 

Contributed by:

Thomas J. Harrington

Real Estate Attorney

Brock & Scott, PLLC

 

(803) 237-6422

Thomas.Harrington@brockandscott.com 

 

Victoria Murphy
Sotheby's International Realty - Santa Fe, NM
Santa Fe, NM

I am surprised at how many listing in my area which are being classified as short sales without the seller's speaking to their lenders first. 

May 01, 2009 08:04 AM
Mark Brian
Silver Star Real Estate LLC - Anderson, SC
Anderson SC Realtor

I am glad to see you list the various steps that many may not already know about short sales. Short sales are an emerging niche, sadly.

May 01, 2009 08:31 AM
Ann Allen Hoover
RE/MAX Advantage South - Hoover, AL
CDPE SRES ASP e-PRO Realtor - Homes for Sale - AL

I recently dealt with my first short sale situation.  The bank approved it amazingly fast....only 15 days.

May 07, 2009 01:12 AM