Successful Short Sales and Understanding the Process
Distressed homeowners who are frustrated quickly give up the fight because of the seemingly long process to resolve their troubles. And rightfully so; many have fallen into a dire situation through no fault of their own and those that bit off too much are still in need of a quick resolution. There really isn’t a quick resolve but homeowners must be determined to find the answers and that can only come through knowledge combined with tenacity.
Having a successful short sale can be achieved by understanding what you and your real estate agent must accomplish in a short period of time. Lots of phone calls, paperwork and mailing and faxing will be included but everything is possible.
Where to Start…consider that a homeowner with a $400,000 mortgage is late on the loan payments and foreclosure is within sight. The homeowner discusses with the real estate agent a proper offer for the home and contacts the lender. Discussions and negotiations begin and the agent offers the lender $350,000 as full payment for the loan, which the lender accepts.
This is referred to as a short sale.
Negotiation through the loss mitigation department is the significant factor in decreasing the home’s value and offering a buyer a deep discount.
When opportunities emerge for lenders to sell distressed properties without incurring big losses, they often see the savings and will agree to it.
Maneuvering a Short Sale
Negotiating a short sale with both the homeowner and lender is a complicated process. It takes a lot of tedious research and patience for all parties before the deal can be closed.
A seasoned real estate agent is crucial to a successful short sale. The agent knows the lender will be motivated to recoup any losses and avoid future losses and he/she will help negotiate the process for you.
The lender will collect every piece of information about you, your home and the reasons why you’re looking for a short sale. It’s essential that you gather as much information as possible about your property and recent events that led you to this point prior to contacting the lender. Keep in mind, lenders are receiving hundreds of calls and voice mails every day so when the lender does get on the line your real estate agent will need all the pertinent facts to answer all the questions. Missing information will only delay the process and move you closer to foreclosure.
The lender will request basic information about the property, including the proposed deal and most important, the value of the property and the financial position of the homeowner.
Aside from the initial introduction and negotiation discussions, the goal of this conversation will be to request a short sale packet that includes everything you need; instructions and forms to secure a short sale deal.
The lender will require a hardship letter detailing all the reasons you are behind on mortgage payments. This will be an extensive detailed letter and will require the homeowner to submit pay stubs, original banking records, tax records and any other personal financial accounting to accompany the letter. It is critical that you submit everything requested otherwise, your offer will probably be denied.
Keep in mind everything is significant when requesting a short sale. Provide comparisons of nearby properties that show decreased property values in the neighborhood; newspaper clippings that paint a bleak picture of crime and “bad news” of the surroundings; anything that will reduce the value of the property and can be utilized during negotiations in the short sale process.
It usually takes about six to 12 weeks to receive an answer from the lender however with the overwhelming demand of negotiations today it can take much longer to complete the short sale process. Your real estate agent can lead you through the process to ensure you are providing all the documentation needed for a successful negotiation.
