About Short Sales
If you are facing foreclosure, and have exhausted all other options you may need to sell. If you have little equity in your home it could be discouraging, but don't worry, it is not a problem.. sometimes a short sale is necessary to avoid foreclosure. ( A short sale is when the bank accepts less than what is owed on the property ). I have experience and relationships with the banks to help you accomplish the sale to avoid having a foreclosure added to your credit report.
Doing short sale is quite tedious. First, there needs to be a valid reason as to why the bank should accept a short sale. Some of these reasons include inability to pay the mortgage and you need to sell but owe more than the current market value or the property being in poor condition as to not receive full market value. If you can afford the maintenance to get market value for your home, I suggest you do so, as short sales are a long process and although for the most part are accepted under proper circumstances, they are ultimately subject to bank approval and they do not have to accept the offer if they think they can get more money for the property.
Your agent will start the listing out at full market price and should do full service marketing. There needs to be a reasonable effort to get asking price.
Due to the circumstances leading to the sale you will probably be in a time crunch. So your agent will reduce the price within a short period of time and will continue to reduce the price periodically until the price reaches a reasonable selling price for the market compared to your homes condition. During this time you will be asked to complete a hardship letter. An example of a hardship letter can be found below.
Once you receive an offer on the property, your agent will submit it to the bank along with the short sales package. Once the bank receives all of the information that they need, it can take anywhere from a week to a month to get a response from them. Files are processed in the order of which they are received, an appraisal is ordered on the property and it goes through your negotiator and numerous other hands before you get your final answer. During this time, you should allow your home to continue to be shown to potential buyers and continue to accept offers, your agent will advise the buyers agent that there are other offers on the property and submit their highest and best offer.
If the bank approves your short sale, they prefer that the closing takes place within 30 days. You will need to continue to maintain and care for the property until the closing and be prepared that the buyer will expect to take possession of the property the moment papers are signed at the closing.
Good luck! If you find yourself in this situation as the agent or someone who may need to sell in a short sale situation and have questions feel free to contact me.
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Example of hardship letter
A Hardship letter is something most Mortgage Companies will require to consider a short sale. This is your opportunity to help them understand your situation and to appeal to as to why they should approve a short sale. This should not be used to complain to what they have done or not done to make your situation worse. This letter must be honest and represent the facts clearly. It must prove to them that the situation that caused you to fall behind is persistent and that you will not be able to afford your monthly obligation. You must also have a legitimate excuse for falling behind... financial problems in itself would not be an adequate excuse. Loss of a job, death in the family or an illness would be an acceptable reason to fall behind on your Mortgage. Here is one example of a letter that the Mortgage Company is looking for:
Name: (Your Name)
Address: (Your Address)
Mortgage Co: (Mort. Co.) Loan No: (your Loan Number)
I/We, (Your Name), are requesting that you review my financial situation to see if I/We qualify for short sale.
I/We are having problems making my monthly payments because of financial difficulties created by (whichever circumstance applies):
Unemployment
Reduced Income
Divorce
Separation
Medical Bills
Too Much Debt
Death of my Spouse
Death of a family member
Payment Increase
Business Failure
Job Relocation
Illness
Damage to Property
Military Service
Incarceration
Other (Please Specify)
This difficulty or situation happened on or about this date .
I/We believe that my/our situation is Permanent
This is a brief account of the situation is as follows: (explain your situation... tell them you feel you cannot afford your payments)
I/We, (your name), state the information provided above to be true and correct to the best of my/our knowledge.
Borrower's Signature
Date
Co-Borrower's Signature
Date
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