How the Short Sale Process Works
With the current housing crisis, short sales are becoming very popular with underwater homeowners and lenders that are holding a lot of bad mortgages. A short sale is an agreement between the homeowner and the bank to sell their property for less than what is owed on the mortgage contract.
In the past few years the short sale process has been used to sell thousands of homes that were purchased for much more than what they are currently worth. Most lenders have detailed information on their websites which discuss what information they will need to consider a short sale. Here is a step-by-step breakdown of how the short sell process works.
Step By Step Process
1. Find a real estate agent that can help you complete the short sale. It is recommended that you look for someone that has completed a few of these types of sales in the past year. A realtor with experience help you speed up the process and will know exactly what to do while speaking with the lender.
2. Have your real estate agent list your home for sale. Most realtors will have the home listed on the MLS within 24 hours.
3. Once the house is listed you will begin receiving offers from potential home buyers. Once you find a home buyer that has been pre-approved you will want your real estate agent to submit that offer to the bank.
4. Getting your paperwork together will be the next vital step of the process. The bank is going to want some documents to prove that you are experiencing a financial hardship. They will want to see your last two years tax returns, any W-2s, your last two months bank statements, and a hardship letter explaining what your financial difficulties have been.
5. Your realtor will want to fax all of your paperwork and information to the lenders loss mitigation department. This is the department that most banks have set up to speed up the process of their short sales.
6. It is recommended that you stay on top of your realtor to follow-up with your lender. It is a good idea to have your realtor calls your lenders loss mitigation department to make sure they have received all the paperwork so they can begin processing the short sale.
7. The next step of the process is up to the lender. You must wait and see if they are willing to accept the offer that has been given by the potential home buyer. In many cases this process can take a few months. Banks have become very proficient in the past few years with the short sale process. They have done so many of these types of sales the wait time has been decreased dramatically.
If the bank does not approve the sale you will want to get detailed information on why. In many instances paperwork may have been missing or the price was not up to par with the current market. This does not mean you will not be able to sell your house to a different buyer in the future. Be diligent in getting the information from your lender and work with them to make sure they have all they need to process the home sale as fast as possible.