Short Sales: How They Work

Lets assume you know you cannot keep your house. There is simply no choice but to sell or foreclose. Foreclosure is one of those events that ruins credit and any opportunity to purchase again during better times. Now lets assume there is no doubt in your mind that you can get enough in a sale to cover your loan.

You should approach your lender with your case and hope they will agree that this you may have to foreclose and that the market price today will not cover the loan. You will get less for your house than you owe. Following is a short list of the general procedures involved in a short sale. Keep in mind, there is no standardization, each lender will have their own process and demands and no doubt, there own forms designed to create more havoc with your life than necessary.

  • Hurrah! You get an Offer; Of course its below market and below the loan amount but at least you are out from under and probably feeling relieved.
  • Purchase Agreement: A signed purchase agreement is the first step in the sales process. Generally, you cannot pull any money out of a short sale. The only hitch so far is that often refuse to pay a real estate commission, they often want to negotiate with the buyer themselves.
  • Approach the Lender: with the offer. Its best to have most of this done before the listing process but most lenders will require the following form you as the owner.

a. Hardship letter: You must really be destitute or close. The lender will not forgive any debt otherwise. This letter must show clear proof that you cannot continue to make house payments or pay the loan in full.
b. Release Letter: Giving the lender the authorization to release information so that the purchaser can negotiate directly with the lender.
c. Financial statements: a list of your assets and liabilities, tax returns, bank statements, proving you could not continue to pay the mortgage
d. A copy of the listing agreement: Basically, they want to see proof that the house is really on the market and that there is a bona fide buyer in the wings.
e. Attachments: All other debts related to the home, such as second mortgages, property taxes due or liens attached

6. The Appraisal: The lender will do this

The full article is on line at

Thanks for Reading

Howard bell

No comments: