Short-Sales
A short sale takes place when a bank or mortgage lender agrees to discount a loan balance due to financial or economic difficulties on the mortgager's part. A short sale occurs typically when one is behind on payments. If someone is late one month on their mortgage and they foresee that they are not going to be able to pay the upcoming months, then the best thing to do would be to short sell your home. I think that it is important to know the step- by- step processes in short selling your home.
The first thing that you want to do is contact a real estate agent. Preferably an agent who is familiar with short sales and the short sale process. The agent will sit down with you and give you a listing presentation specific to short selling your home. The rule of thumb is that the agent will list your home approximately 15% lower than the market value. The price will continue to drop until on offer has been made on the property.
I would also suggest you find a real estate attorney that specializes in short sales. He/she will guide you through the entire process.
As part of the listing presentation the real estate agent will explain to you that you will need to fill out a Short sale packet. This is basically a packet explaining to the bank why you need to short sell your home. The packet includes a financial analysis worksheet that will you have to fill out that will include all of your assets, debt, income etc. You will also have to fill out an authorization of release form so that you and/or your real estate attorney can call the bank to receive information. There is also a hardship letter in the packet in which you are to write a letter to the bank explaining how you got in this situation and why you need to short sell. You will need to provide the lender information, as well as an executed contract and listing agreement. The last thing you need to include is your W2’s for the past two years and also bank statements from the last two months. Every short sale packet varies slightly but this is what I have used for my past experience with sort sales. After completing the packet of information, you will need to send the packet to your lender.
From this point on, the bank is in control. The bank has to review the information in the packet and then have an appraiser come out to do a Broker Price Opinion to see what the value of your home is. After they determine the value, they evaluate the situation and determine the price they are willing to accept. At this point the buyer either accepts or rejects the offer. If the buyer accepts the offer, then the closing takes place within 30 days from acceptance. Your credit will be affected, but not as much as it would if your property forecloses.
