What’s Involved in a Short Sale? If it’s been established that a homeowner needs to sell to avoid a foreclosure, a Short Sale may be the best choice over other options. So what exactly is involved in a Short Sale?
1. Lender Request
– most lenders now have an assembled package (forms) of what documents they need to see, before they decide if the homeowner qualifies for a Short Sale. This can be requested by contacting the lenders Loss Mitigation dept. Some professional Realtors also carry acceptable forms of these documents.
2. Letter of Authorization
– before any profession assistance can be had, the lender will required the homeowner to provide authorization or “permission” to the
lender before discussing matters pertaining to the mortgage. A Listing Agreement that shows that the property is “actively” competing in the real estate market; may also be required by the lender.
– to the Short Sale Package include, but not limited to a hardship letter, a financial worksheet, current pay-stubs, bank statements, federal tax statements, P&L Sheets (if applicable), contribution letters (if applicable), CMA, etc. Some of these documents will require updates every so often at the lenders discretion.
4. Time Frame
– of the Short Sale is where a lot of homeowners give up. Once the Short Sale Package has been received by the lender, a follow up to determine the status should be done once or twice a week. Lenders are bombarded with requests; patience and persistence are very much needed in this instance, and extremely hard
to apply together.
5. Marketing & Maintenance
– I mention these together because they have to work hand-in-hand. A history that the property has been marketed at competitive fair market value needs to be established. Price adjustments may be required accordingly (based on the local market). Maintaining the property in good marketable condition can be deflating, especially if there’s no interest being shown, but very necessary.
6. Short Sale Approval
– is what everyone is working towards. A HUD-1 (preliminary settlement) should be used in justifying either a “List Price” or “Buyer’s Offer”. The lender will require this to compare to the BPO provided by a 3rd party. Many variable go into attaining a lender’s approval. An “approval” can be had from as quick as 10-days to as long as 24-months.
Generally, when an approval is given by the lender, it only applies to the offer on the table. There are instances where properties have been marketed with an “approved price”. However, most Approval Letters indicate the name and price of the accepted offer, and cannot be used with any other buyer.
For more information on how Shorts Sales contact Diego Marin