Short sales are becoming much more frequent in the United States, mainly because they are an alternative to foreclosure. Homeowners who are facing foreclosure are looking for ways to keep from damaging their credit, and a short sale does just that. Quite basically, a short sale is when the lender agrees to accept an amount less than what is owed on the property loan. It is important to understand that not all lenders will accept a short sale. In this article, you will learn some information about short sales and how to deal with the process.
If you are considering a short sale, you should first call the lender that is holding your mortgage loan. You need to specify that you need to speak only to someone who handles the short sales for the company. Be prepared to be put on hold, transferred, and even disconnected a ton of times before you get to the right person. You may even have to explain what a short sale is to the person on the other end. You do not want the general department either. You should ask to speak directly to the supervisor of the short sales department.
Your next step is to send in a written letter of authorization. This will give the lending company written permission to disclose any pertinent information to the parties that request it. You should include your name, address, the date, and account number. You should also have the document notarized, just to be on the safe side. Make a copy for yourself.
Somewhere along the way, you may find that you need a real estate lawyer. It would be best if you contact one as soon as you start looking into a short sale. The lawyer can help you through the process. When you contact a real estate lawyer, you need to ask them to prepare a preliminary net sheet for you. This document is a bunch of fee calculations that show the price you expect, the costs associated with selling the home, unpaid money you owe, and back payments and late fees.
You will also need to provide a written hardship letter. The best tip that you can get for writing this letter is to be as pitiful as possible, within reason of course. Do not simply say that you lost your job and cannot pay the full amount. You need to include other hardships that you have suffered as well as the loan problems. If you have children, you add them in somewhere as well. It sounds awful, but you need to play the sympathy card here.
In many situations, you cannot sell the home for the amount that is owed. The market rises and falls so quickly, but when it falls, it stays down for awhile. This is usually the main reason for a short sale. It is simply impossible for you to pay the amount that is still owed on the loan because the house will not sell for that much. In this case, you can obtain a comparative market analysis from the real estate agent. If you provide this document to the lender with any other documentation that they need, you are more likely to get the short sale approved.
Short sales can be a headache, not just for you, but for the real estate agents as well. There will be tons on paperwork and records that you will need to fill out and send in, but just keep in mind that lenders tend to look at short sales as a way for them to lose money so they will be rather demanding.