A short sale in real estate is not always a pleasant transaction.
There are many ways to sell your home, but most people are under the impression that selling your property via short sale will destroy your credit, embarrasses your family and strip you of your dignity – and all that couldn’t be further from the truth. While it is an emotional and sometimes humbling decision, The Brang Team handles this sensitive transaction with the respect and assistance that every homeowner deserves. So if you are a homeowner who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings, and one those options is called a “short sale.” Read on…
More than half of our sales over the past few years are short sales. That’s how prominent short sales have become.
When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.
If you are considering selling a short sale, there could be drawbacks and as a real Estate Broker, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences. For your protection, I suggest that all borrowers:
- Obtain legal advice from a competent real estate lawyer
- Call an accountant to discuss short sale tax ramifications.
Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect and the BRANG TEAM will do this for you:
- Call the Lender: We may need to make a half-dozen phone calls before you find the person responsible for handling short sales. We will not talk to the “real estate short sale” or “work out” department, We will get the supervisor’s name, the name of the individual capable of making a decision.
- Submit Letter of Authorization: Lenders typically do not want to disclose any of your personal information without written authorization to do so. We will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan.
- Preliminary Net Sheet: This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions.
- Hardship Letter: This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or any other life altering situation, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
- Proof of Income and Assets: It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
- Copies of Bank Statements: If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it’s probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
- Comparative Market Analysis: Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). We will utilize this to show prices of similar homes: Active on the market; Pending Sales; Sold from the Past 6 Months.
- Purchase Agreement & Listing Agreement: When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement.
Now, if everything goes well, the lender will approve your short sale and you can move forward from this hardship and begin anew chapter of your life. Short sales are never fun, but we make it our job to shield you from the stress and make sure this is as easy of a transaction as possible for everyone involved.
Call us today to sit down and let us discuss your current mortgage situation.