About Short Selling a House: What You Need to Know
Foreclosing on your home is the last thing on your mind, when it comes to getting a home mortgage. However, it does happen to many people. If you fall into this financial pitfall, it is likely that you’ll struggle with it. In fact, a lot of families have experienced so, particularly during the financial crisis that hit the world’s economy in 2007-2008. Statistically, in 2008, one in every 45 homeowners filed for foreclosure. In total, there were 2.5 million foreclosures in the United States at that time.
Why foreclosures happen
It is indeed a financial struggle for you and your family if you are sucked into the black hole that is called the foreclosure. With such hard times, foreclosing would be one of the options if you have difficulty meeting deadlines for paying your mortgages. The instances of being late in your payments won’t help at all, too.
As it is, mismanagement and lack of communication between homeowners and lenders often result in foreclosures. However, it seems that such problems are being resolved through various financial solutions. One of these known solutions is short selling.
Avoiding foreclosure with short selling
In the realm of real estate, a “short sale” is the selling of real property to a potential buyer, in which the amount of the property is sold short of the balance of debts secured by liens against the property. To put it simply, a homeowner is able to sell the property short of the current market value of the property.
Remember that not all banks and lenders approve of a short sale. But then, that is already a thing of the past. As it is, a lot of financial companies and providers are able to serve as “middlemen” between homeowners and lenders in able to come up with a solution in which the former tries to have their intent of a short sale approved by the latter. In other words, such transaction must be made to satisfy both parties.
How to short sale your home
Meanwhile, here is how to short sell your property in simpler terms.
1. It pays to obtain the expertise of a short sale expert if you want to speed up your short sale. His or her expertise will be proven valuable, especially in terms of marketing the home you’re selling, as well as finding a potential buyer.
2. Documentation is important. That way, your lender would be able to assess whether you have a legitimate reason to have your property short sold. Financial information including copies of tax returns, assets and liabilities and the like must be included.
3. Be honest. In your documentation, don’t forget to also submit a letter of authorization to have your lender allow you to speak with interested parties about your loan. It also helps if you present a hardship letter to explain your recent financial difficulties and other events that may lead you to not be able to pay your mortgages for your home.
4. Once you have all the needed documentation and letters, you must have them collected by your short sale expert. He or she will then submit it to your lender, including the purchase offer.
5. A waiting period ensues, around two to three months. After which, a negotiation takes place, wherein the potential buyer’s agent would accept (hopefully) the property short of its real market value. An appraiser will be sent to a bank to inform of the real market value of the property. If approved, a letter will be issued.
6. Once you receive the letter and approved of the sale, your home will be considered short sold.
This guest blog was provided by Scott Gordon Realty, the finest Palm Beach luxury real estate services, luxury rentals and condos for sale.
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