Information about Short Sales

A short sale in real estate is when a lender allows a homeowner to sell their home for less than the debt owed on the mortgage. By working with the right listing agent, many homeowners are able to have all their debt forgiven.

A short sale is the best option for many homeowners who are underwater on their mortgage payments, and have been unsuccessful getting their loan rates refinanced or reduced to an affordable rate. In both a short sale and a foreclosure the property is lost, however, a short sale only affects one's credit for two years. A foreclosure, on the other hand, will negatively impact your credit for seven or more years. Another benefit of a short sale is that many banks and government programs offer financial assistance with completing the sale and moving costs. Those who are foreclosed on don't receive that type of assistance.

Choosing the right short sale agent is imperative. Their job entails much more than slapping the listing into MLS and throwing up a For Sale sign; they will be handling negotiations with the bank. If the short sale agent has inadequate experience dealing with loss mitigation and negotiators, the seller will be the one who suffers in the long run.
 

An experienced agent will be much better suited to negotiate with a lender, because not all lenders handle short sales the same way. The right agent can assure that you will pay little to nothing when selling your home, and their sales commissions are paid by the bank, not the buyer or seller. 

• Sale of the property-cash to close
• Forbearance
• Reinstatement
• Statutory Postponement of Sheriff's sale
• Loan Modifications

The Short Sale process is complicated, but may be the better alternative to Foreclosure.

If you are considering selling your home on a short sale please contact Myron Lund for a confidential consultation to determine if a Short Sale is for you and if you would qualify for one.

The best way to short sale a home is to hire a short sale agent. A short sale agent not only has the necessary experience, but they often have worked on previous short sale transactions and know exactly what needs to be done to help you short sale your home. Attempting to short sale a home on your own will only lead to unnecessary stress and most likely an unsuccessful attempt at avoiding foreclosure. The first step in short selling is to consult and hire a professional.

CALL THE LENDER

The short sale agent will call the lender and find the person responsible for handling short sales.

SUBMIT LETTER OF AUTHORIZATION

You will need to write a letter of authorization to the short sale agent who is selling the home on your behalf. The letter should include the property address, your loan reference number, your name, the date and the agent’s contact information. Your short sale agent can help you draft this letter.

PRELIMINARY NET SHEET

This is an estimated closing statement and shows the price you expect to receive for the home. This sheet also shows unpaid loan balances, late fees, real estate commission and payments due. Your short sale agent will be able to prepare this for you because it is quite complex and requires some industry knowledge.

HARDSHIP LETTER

The hardship letter explains how you got yourself into the financial turmoil and why you are facing possible foreclosure. For example, loss of income due to circumstances that are outside of your control such as loss of a job due to lay off, illness or injury.

PROOF OF INCOME AND ASSETS

This discloses to the lender all of your income and assets. It is important to be honest about your saving accounts, other properties, current incomes and anything of tangible value.

COPIES OF BANK STATEMENTS

This goes hand in hand with proof of income and assets.

COMPARATIVE MARKET ANALYSIS (CMA)

This is often prepared by your short sale agent who is familiar with the current conditions in your neighborhood. A CMA will show prices for similar homes in your neighborhood, including which ones are active on the market, pending sales and the ones that have been sold in the past six months.

PURCHASE AGREEMENT & LISTING AGREEMENT

Once your short sale agent has found a potential buyer, the lender will want a copy of the offer and the agreement.