Selling Your Lindenhurst NY Home As A Short Sale
What is a Short Sale?
A short sale is when you owe more on your mortgage than what the market value is on your home. This is simple to understand. It is also better on your credit than a foreclosure. As of now, you will be able to get another mortgage 3 to 5 years down the road. A foreclosure on your credit means at least 10 years before you can get another mortgage.
What Are The Steps To Begin The Short Sale Process?
In order to do a short sale, you have to claim a hardship like: job loss, illness, divorce, etc., anything that has prevented you from being able to pay your mortgage. Your obligations must exceed your income or no Short Sale for you! The bank will not approve it. You have to sit down and hand-write a Hardship Letter explaining what has happened to prevent you from paying your mortgage.
Documents Needed
You need to have the following handy and ready to go once you have a buyer: W-2's, most recent tax returns, Profit & Loss Statement if you are self-employed, 2 months of bank statements (savings account, checking, etc.), recent pay-stubs if you and your spouse are still working. You also need to include your hardship letter. All of this is part of the Short Sale Package that your bank requires.
Hire A Realtor
The best thing to do is hire a Realtor. Going it alone is not worth it especially a short sale! Not having representation is not a good idea. A Realtor experienced with short sales will help you along the way. Even hold your hand. This is a difficult time in your life and you need someone who can handle the difficulties short sales can bring and maybe even a shoulder to cry on. Your Realtor will even call the bank to find out what other documents they will need just in case. Not all banks are the same and it's the job of the Realtor to find out what is needed to help keep things going smoothly. Also, you have to send in a Letter of Authorization giving your Realtor permission to speak with your bank during the short sale process. This can be faxed to your bank most times. Without this, your Realtor's hands are tied. Coldwell Banker has a Letter of Authorization that we can give to our seller clients.
Market Value
Determining market value is the same as if you were selling your home under normal circumstances. We have to price your home based on what buyers are willing to pay. Me, your Realtor, is in charge of that. Once I determine market value, then we can place your short sale home on the market.
You Have A Buyer! Now What?
You have a buyer and now the waiting begins. Your short sale package, purchase agreement, your buyer's mortgage pre-approval letter, Hud-1 Statement and the Listing Agreement must be sent into your bank for approval.
How Long Does The Approval Take?
I'm glad you asked because there is no clear-cut answer to this. Having 1 bank on the mortgage is better than 2 or more. If there are 2 mortgages then both banks have to approve the short sale. Here is a perfect example of a short sale deal I'm in now: Bank #1 wants to give Bank #2 $10,000 Bank #2 says they want $15,000 and here comes the back and forth negotiations over a $5,000 difference. We went into contract on 12/23/09 and I found out today (3/12/10) that Bank #2 approved the short sale. We are now waiting on Bank #1 to get things in order before we close. In other words, Bank #2 agreed to the $10,000. Who knows at this point when we will close.
Banks are so overloaded with short sales than ever before that it's difficult to determine how long it all takes. Having 1 bank on the mortgage does simplify things.
Please keep in mind that all banks are not the same when it comes to the short sale process. Consult a Realtor to help you with what paperwork your bank will need from you.
As of April 5th, 2010, President Obama created a Federal Short Sale Program I just hope it's going to work!
If you have any questions regarding short sales, you can reach me at: (631) 703-0201 I'm here to help.
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