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Equal Opportunity Housing REALTOR

How To Do A Short Sale

The short sale process has many steps that must be taken seriously and handled delicately. If any step is overlooked or not properly completed, the short sale could be delayed or flat out rejected by a lender. A short sale will typically take a substantial amount of time to complete, an average of 120-180 days from the time it is listed until closing. Although a short sale is known to have somewhat of a lengthy time frame, it is also known to help homeowners escape their loan debt and move on with their life in more than half the time a foreclosure would allow. Below are steps to the short sale process. If followed correctly, the chances of a successful short sale may be increased dramatically.

First and foremost, it is important to get in contact with the bank as soon as you have realized you are falling behind on mortgage payments or you see that you will be in danger of being delinquent in the near future. The sooner you can make contact with your lender about the possibility of a short sale, the quicker you will be able to gather all of the appropriate documents asked for by your lender and begin the short sale process.

The second, and perhaps the most important step in the short sale process, is getting in touch with and hiring a professional and experienced short sale specialist. The advantage of a short sale specialist working on your behalf through the process is typically an increase on the successfulness of your short sale. A short sale Realtor® will be with you from beginning to end in your short sale insuring all paperwork is properly filed and good communication is kept with you and your lender. One of the best luxuries of having a short sale specialist work on your behalf is that their services are completely free to the homeowner. Your lender will traditionally pay all closing costs and commission fees. After all, lenders too may benefit from a short sale because they will also be avoiding the costliness of a foreclosure. While proper training may be important to consider when selecting an agent, there is no substitute for experience. When selecting an agent, make there they have closed many short sale transactions and also have experience working directly with your lender.

The next step in the short sale process would be determining a fair price on the home. Some Realtors may want to market the price at a low so that the home can be sold as soon as possible, however; this isn’t necessarily the best option when trying to determine a fair price on the home. The goal for a homeowner is to get the transaction approved, closed and move on with their life. This can be difficult if the home is priced too low. The fairest way to evaluate the value of a home is referred to as a broker’s price opinion. This valuation method will become a reference point for the lender of the property and help determine a fair price, but would also require a certain amount of business sense on behalf of the real estate agent. Another reason the second step of choosing an experienced Realtor® is critical.

A vital step in the short sale process is completing the short sale package. After all steps have been completed in the short sale process, the next thing to do is prepare your short sale package which will be handed over to the bank for further judgment on your hardship. The short sale packages purpose is to give the lender a better idea of your hardship and help them make the decision on whether or not the short sale is worth approving. Within the package you will need documents like bank statements, W-2’s, pay stubs, a financial worksheet, a hardship letter, etc. Your short sale specialist will be able to help you with the content of your hardship letter as well as deliver the short sale package to your lender.

Once the property is marketed, an offer is received, and a short sale package is submitted, The next step in the process is the negotiation with your lender. While lender processing and approval times have improved in recent times, historically this is the lengthiest time in the short sale process. Processing with your lender can take anywhere from several weeks to several months for approval. Your lender will typically accept your short sale package, determine a market value and acceptable price, negotiate acceptable terms, and then approve the short sale. After initial approval by your servicer, the investor on the loan will be required to then approve the sale, any second position lien holders, and finally followed by the mortgage insurance Maximum One Executive Realtors approval if applicable. Approval of these other parties is typically the longest delay to the approval process. Prior to accepting the final terms of the short sale, your Realtor® and negotiator should help insure the terms of the short sale are in a home owners best interests. Some of the more favorable terms would be complete forgiveness of the entire debt from all lenders, and even money back at closing for the seller to relocate.

Once an approval letter is in hand, the closing can proceed as quickly as the buyer can arrange financing and the seller can arrange a new residence. With the option of a short sale available to distressed homeowners, there should never be a reason for a homeowner to feel as though a foreclosure is their only option. With the help of an experienced short sale Realtor, your ticket to financial freedom and a fresh start could be right at hand.