Can you navigate the road to short sale success? Many thousands of Americans have found relief from unmanageable mortgages via a lender-approved short sale. The Atlanta homeowner journey from underwater mortgage debt to "sold home" is usually a route that runs through a short sale to a brighter, unencumbered future. That route can be tricky, so here are some helpful tips from expert Atlanta short sale agents to smooth your way. Taking the first step on a journey of recovery will be easier when you've armed yourself with this handy roadmap for the journey ahead.
Here are our top 3 agent-suggested "First Steps" to a successful short sale.
Tip #1 - SET CORRECT EXPECTATIONS
Most sellers are not prepared for some of the standard practices associated with short sale. Before you get started, understand a ouple of important facts about the road ahead:
You will have a deficiency, but you may not have to pay it. Because you want to sell your property for less money than you owe on it, there will be a deficiency on your loan balance. Most lenders will forgive some or all of this amount in a short sale, based on your financials. Otherwise, you may be asked to make a contribution toward the deficiency. Deficiency judgments have been the exception rather than the rule in recent years of short sales, but you should be prepared to negotiate if you are asked for financial participation.
Expect to fill out a lot of forms and submit (and possibly re-submit) some personal information. Lenders require detailed paperwork, including personal financial information, before they will approve the short sale.
Short sales take a long time. Processing the paperwork typically takes anywhere from 6 weeks in a best case scenario to 6 months or more if things get bogged down, so be prepared and be patient. The more prepared and responsive you and your agent are, the smoother and speedier your short sale will be.
Tip #2 - PREPARE AHEAD FOR A SMOOTHER JOURNEY
We all do better when we are boned up and ready to win. To insure your win, there are a few steps you can take before your short sale begins, Start by preparing a dedicated pocket folder or file folder for each lender, with a sleeve or large envelope for collecting your proofs of income and expenses. Keep it handy so you can easily consult it when you lender or agent calls or requests documentation.
Gather proofs of income and expenses for the previous two months. When your lender requests them, you’ll have them handy to scan or fax. Most lenders will certainly require income proofs, and a minimum of two (2) most recent bank statements for all bank accounts.
Write down your monthly budget showing income and expenses, and keep it handy for filling out lender paperwork.
Some lenders require you to write your reasons for short selling on their forms or in a separate “hardship letter” (see how to write a hardship letter here), or both. Draft yours in advance, stating why you need to short sell at this time and why any deficiency payback will create financial hardship for you.
TIP #3 - DO ALL OF THE ABOVE, THEN CONTACT YOUR LENDER(S)
First, create a page in each folder to record notes on each call to the lender (date/time, who you spoke to, what was said, next steps, outcomes, etc).
Next, call your lender(s), ask for the short sales department. Start with the customer service telephone number; they can usually get you in touch with the loss mitigation or short sale department. Find out what’s required to complete a short sale and get a complete package of everything that the bank needs sent to you immediately.
When you first call, you may get diverted to a “preservation” (or something similar) department where your customer service representative may suggest you apply for a loan modification or a deed in lieu. This is becoming customary procedure. A loan modification usually requires that you, the borrower, intend to remain in the property for a designated duration. If you need or want move, you will likely not qualify for this option. A deed in lieu can be likened to a "friendly" foreclosure. It allows you to sign the property back to the bank to avoid foreclosure proceedings, and does not necessarily protect you from a deficiency judgment in the way that most short sales do. For this reason, deed-in-lieu should only be considered if a short sale is not possible. Explain your situation, and request a “complete short sale package.” (In many cases, the same forms are necessary to start a loan modification or a short sale, but it is best to always be clear about what you are requesting.)
Follow up in two days to make sure (1) that your package has indeed been sent to you, and (2) that a processor has been assigned to your account. Get the processor’s name and contact information.
After you've contacted your lender and are all set to move forward, call on a local short sale agent with a track record of success, to help you market and sell your property. In the Atlanta area, contact us.
And get our free Sellers Short Sale Success Checklist to help you keep your short sale on track and on time. The more prepared and responsive you are, the smoother and speedier your short sale will be.
Read more great tips for sellers in our new Sellers Short Sale Success Guide.