A property short sale involves a homeowner’s lender accepting less than what is owed on the mortgage. This allows the homeowner to avoid foreclosure. The process can be difficult and time-consuming for both the seller and the buyer. This article provides steps to help sellers and buyers complete a successful short sale.
Begin the process by demonstrating to the lender that the homeowner is in financial hardship. The lender will want to see bank statements, pay stubs, tax returns and a hardship letter explaining the circumstances that have led to the inability to meet the mortgage obligations. A real estate attorney or certified housing counselor specializing in short sales can help homeowners prepare this package and ensure that the documentation is submitted thoroughly and correctly. Read more https://www.4brothersbuyhouses.com/we-buy-houses-in-falls-church-va/
Work with a real estate agent who is familiar with your local market to determine an acceptable price for the property. Doing a careful comparative market analysis (CMA) or broker price opinion (BPO) will help establish that the property is worth less than what is owed, taking into account all selling costs including commissions, liens and closing costs. This is a crucial step for a successful short sale.
Make a reasonable offer and submit it to the lender. The lender will review and approve or reject the offer based on the amount it is willing to accept, the amount of liens and closing costs and whether the homeowner has sufficient equity. Lenders may be able to negotiate a lower offer than what is listed on the Multiple Listing Service (MLS).
A qualified real estate agent will assist the homeowner with preparing a narrative of their financial situation to present to the lender along with the short sale package. The agent should also help the homeowner compile a list of all current assets to verify their equity position. If the homeowner is unable to provide all requested documentation, the lender will likely not approve the short sale.
Keep in contact with the lender. Lenders are notorious for losing track of short sale paperwork. It is a good idea for sellers and agents to follow up with the loss mitigation department every day, if possible, to keep their paperwork on top of the priority list.
Be aware that the process could take several months to complete. The lender will need to approve the offer, negotiate the purchase agreement with the buyer and close escrow. This can be a difficult catch-22 for the buyer, who will need to sign a contract of sale but will not know if the transaction will be approved until they have submitted the short sale package to the lender. Including a contingency that the short sale be approved by a certain date is helpful in this situation. However, if the buyer does not close by that date, they will lose their earnest money deposit and possibly their financing approval. This is not a desirable situation for either party. Therefore, a buyer should be preapproved for financing and be prepared to make a cash offer if the short sale is not approved in a timely manner.