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Advice on Short Sales

Real Estate Agent with International Properties BRE# 01034242

By Roby V. Pagong

What is a short sale and why do homeowners want to do it? A short sale happens when the value of the property becomes lesser than the remaining balance of the mortgage. The homeowner applies for a short sale because he can no longer afford to make the payments and it seems the most logical thing to do. However, it is not that easy to get it approved. The application has to go through several steps before the lender will even consider it.

You should learn how the lender thinks if you want to get an approval from him. One thing you have to understand is that the lender wants to minimize losses. This is why he wants to make sure that he gets a good deal out of the short sale. If not, then you will probably waste a good short sale package.


It is very important that you qualify first. The first requirement is the decline of the value of your property. This normally happens if the general value of the property in your area dropped. This can also happen if you failed to properly maintain and repair the property. Aside from that, the status of the mortgage has to be in default or near it. These requirements are indicative that you have experience certain hardship.

You should also include a hardship letter in your requirements. The letter will explain why the homeowner failed or will fail to make the monthly payments. However, not all hardship letters are acceptable. This is why you have to convince the lender that the hard times you have experienced have led you to the state you are currently in. Among the common hard times acceptable to the lenders are unemployment, death in the family, medical expenses and divorce.

You should also present your financial statement to the lender. He needs this to confirm that you have no other means to settle your mortgage. You have to understand that the lender is strict about doing this because they will be losing significantly. Moreover, there are homeowners that are using this to escape their monthly obligation. Some apply for a short sale because they just want to move to a new home. You should also keep in mind that this is time consuming and will take a long time. This requires you to be patient.

Tips for the buyer

Investing in a short sale is a good deal for most. However, you still have to be careful when you invest in one. The first thing you need to do is to conduct a research. You can put your real estate agent to work and ask him who the title holder is. You should also determine the remaining balance of the mortgage. This is important to make the right offer. Make sure that your agent has experience with short sale so that he will be able to guide you well.

Purchasing a short sale is a great investment but like the seller, you have to be patient. The lender can easily decline the proposal and if you really want to purchase the property, you have to be ready to increase your offer.

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A.J. Modig International Properties 2835 Camino Del Rio South #100 San Diego, CA 92108 877-640-4321 619-295-4444