When the economy collapsed a few years ago, many people in the United States could no longer afford mortgage payments and had to undergo a short sale. Even though this was a hard an unfortunate process, it still allowed these homeowners to avoid worse alternatives such as foreclosure. If you want to perform a short sale, here’s what you should do:
If you need to short sale your home, you will need to let your lender know. You will need to submit a letter of authorization to your lender in order to give permission to disclose information to real estate agents, lawyers, and closing companies.
You will need to acquire a preliminary net sheet to detail the expected sales price and costs, and other details such as unpaid loan balances, late fees, and outstanding mortgage payments. If it’s determined through this sheet that you will receive cash from the sale, you will not need to enlist a short sale.
When doing a short sale, you will need to illustrate to your lender that you are in a financially hard situation that mandates this. This letter should detail the circumstances that led to the financial hardship such as a job loss or medical bills. Lenders will take this into consideration when determining your need for a short sale.
You will need to report any and all income or assets you have in order to avoid committing fraud. This includes information about your bank accounts, any income, etc. Your lender will take a financial loss when you short sale your home so he or she needs proof that you will not be able to pay back the money. Additionally, submit a comparative market analysis if your short sale is due to a fluctuating market value.
If the agreement has been agreed upon, you must give your lender a copy of the sale offer and listing agreement. Your lender will likely try to renegotiate commissions during this time. Ask your lender to not report the short sale to credit agencies so you can proceed with buying another home in the future once your financial situation settles.