This is What Happens When You File for a Short Sale
Are you underwater on your mortgage? Have you been struggling to make your payments, and are now considering a short sale as an option?
If so, it’s important to know what to expect before you decide to sell. In this video, we’ll tell you about the process of filing for a short sale, and what you can expect once it’s complete. So let’s get started if you are curious about what happens when you file for a short sale!
What is a Short Sale?
Short sales are a type of real estate transaction where the property is sold for less than the mortgage balance.
With a short sale, the lender agrees to accept less than what is owed on the mortgage. The homeowner then makes up for this difference by paying off the difference in cash or by agreeing to pay it off over time.
A short sale can be a much better alternative than a foreclosure because the lender will be receiving back the majority of the amount that you might owe them minus the shortage amount.
This is considered a discount. It’s just like when you are negotiating for a car that you want to buy.
Normally, when you are doing use car shopping. Your goal would be to try and get something off the asking price.
When you do a short sale the process is mainly based on the home values and the amount you owe.
When you owe more than the current market allows. You will be upside down on the value side.
So that’s when doing a short sale with your lender make sense. Because you owe more than the value of your home.
How to File for a Short Sale
If you are considering a short sale, it is important to know that there are many steps that you must take to complete this process. The first step is to contact your lender and let them know that you want to do a short sale.
Once this is done, they are going to let you know that you need to work with a Real Estate Agent to assess your home value.
Also, they are going to require that you have the home listed. This is when you need to contact a Real Estate Agent. If you are in my area then you can either use the form below.
We will need to make sure that we have a smooth process when doing the Short Sale. The lender will want an assessment of values from the Real Estate Agent.
If your home needs a lot of repairs then it’s ok. You can still Short Sale your home with your lender. This is why assessing your home is important.
To ensure that your short sale goes smoothly, the lender is also going to need an offer from a buyer.
When an offer is received typically there will be a Short Sale Addendum that will be provided to the buyer letting them know that they understand that the home is subject to lender approval.
A lot of people worry that they will be forced to move out while they are doing a short sale. The answer is you are still the owner of the property until you receive lender approval.
If you are facing foreclosure there is a way to have the foreclosure post pone until you close on your house with the signed offer. But, it gets tricky, because a lender might not do too many extensions. So be mindful that the buyer needs to make sure that they are following the time of essence clauses in the contract.
Things That Lender Will Need To Get The Process Started
| To Get a Short Sale Approved, the Lender Will Want You to Provide Them With Certain Documents |
|---|
| 1. Financial Statement (This is typically a part of the lender package that they will send to you) |
| 2. Hardship Letter (This will be a factual statement letting the lender know why you fail behind and why a short sale is necessary) |
| 3. W2s or 2 to 3 Months Paystubs (Lender wants to make sure you are experiencing a hardship) |
| 4. Two (2) Months Most Recent Bank Statements for each checking and savings |
| 5. Listing Agreement (This will be the agreement showing the lender that you have listed the home for sale) |
| 6. Authorization Form (This will be needed when you are working with a Real Estate Agent for the Realtor To Talk To Your Bank) |
| 7. HUD Statement (This will show the amount that the lender will receive from the proceeds.) |
| 8. Lender Required Documents (There will be documents that the lender will also supply that you will need to make sure you fill out) |
| 9. Real Estate Contract (This will be the offer you accepted on your property) |
| 10. Listing Comparable (This will be provided by the Real Estate Agent) |
| 11. BPO (This will be requested by the Lender. A Real Estate Agent other than the Listing Agent will go in the property and evaluate the property and provide a Broker Price Opinion.) |
How Can A Realtor Help With This Process
When you are doing a short sale you will need to hire a Realtor to help list the home for sale. Typically, a lender will require a Listing Agreement when doing the short sale process.
Many online directories will provide you with agents in your area for these requests. You can also search for agents by zip code on Google Maps or by using other online directories such as Yelp, Superpages, and Zillow.
If you are in my area you can reach out to me and I will be happy to list your property for sale.
It is more important to find an agent with who you can communicate and who understands your needs.
A good agent will be able to make sure that the Short Sale process is a smooth one. They will also ensure that the documents are filed on time and follow the necessary protocols.
How Long Does The Short Sale Process Take
When it comes to short sales, the process can be very stressful. However, there is some good news: most people find that their homes are sold in about 3-4 months after going through this type of process
However, there are some situations where it can take longer. This will all depend on many things. Some of this depends on the lender and how quickly they can process the request.
Each mortgage company is different but the good part is if you are dealing with a good Real Estate Agent then the process can run a lot smoother.
Remember, every lender is different and the process could take as little as 2 to 3 months or it could take longer. This will depend on how busy the Loss Mitigation Department is.
Conclusion:
I understand that this is a difficult decision, but with the help of a qualified real estate professional, it can be a much smoother process. Thanks for reading!
If you are considering a short sale, please let me know. I would be happy to help you through the process and answer any questions that you may have.
If you are needing assistance with doing the Short Sale process and you want help with getting your home listed for sale, fill out the form below and I will get back in touch with you.
If you know someone who could use this service please feel free to share!