A short sale in real estate is not always a pleasant transaction.
There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy of foreclosure proceedings. One of those options is called a “short sale.”
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.
Real estate investors can frequently make very profitable purchases of real estate through a short sale. Many short sales do not get approved or fall through for a variety of reasons. Learn here the step-by-step process to initiate a short sale, starting with the homeowner-borrower and moving through lender negotiations to the closing.
1. The Property Valuation Analysis for a Short Sale
Short sales will not work if there is sufficient equity in the home for the lender to sell it and at least break even in a foreclosure. The homeowner must be “upside-down” in their loan. Learn how to determine if this is the case.
Learn About How to Determine if the Homeowner is Upside-Down
2. Contacting the Lender for a Short Sale Application
Lenders will not talk to investors, potential buyers or real estate agents unless they are instructed to by the borrower. You will need to get their approval in writing, contact the lender with that approval, and make the first telephone contact. Learn about it here.
How to Get the Borrower’s Approval and Make the First Lender Contact
3. Writing the Hardship Letter for a Short Sale
The hardship letter is the cover for the short sale package. It is a lot like the cover letter for a job resume. It must be convincing and complete. The lender must get the first impression that it’s a short sale or a foreclosure or bankruptcy.
The Hard Ship Letter Step 3
4. Backing Up the Numbers With the Short Sale Package
The meat of your short sale presentation backs up the statements made in the hardship letter. You prepare a thorough and detailed set of documents and financial data to support the claim that a short sale is a good solution for the lender.
What to Submit to Convince the Lender and Get a Short Sale Approval
5. Elements of a Short Sale Purchase Agreement
Learn the things you need to consider in the preparation of a short sale purchase agreement. Where should you get one? Do you need an attorney? What elements need to be present in the purchase agreement?
What Does a Short Sale Purchase Agreement Look Like?
6. What the Lender Does With the Short Sale Package
If you prepared a thorough short sale package, the lender will be evaluating your numbers and getting some of their own. Learn about it here.
Short Sale Package
7. Negotiating the Short Sale with the Lender & Going to Closing You may have to go back and forth with the loss mitigation department at the lender to get an acceptance of a short sale. Learn about this negotiation and the importance of a fast close.
Negotiating the Sale
Posted By Nilesh Jethwa Wilmington and Leland Real Estate
Adopted from: About.com James Kimmons
Nilesh Jethwa is a local Realtor in Wilmington, and Leland area. If you are interested in contacting Nilesh please Click Here!
I’m Nilesh Jethwa. I’m a Certified Distressed Property Expert (CDPE) in Wilmington NC and Leland NC Area. I make it my duty to provide honest and accurate information about the foreclosure process and short sales. A Certified Distressed Property Expert® is a real estate professional with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market, specifically short sales in Wilmington NC and Leland NC.The prospect of foreclosure can be financially and emotionally devastating, and often homeowners proceed without guidance of any kind. I believe that the best course of action for a homeowner in distress is to speak with a well-informed, licensed real estate professional in the Wilmington and Leland area. We have the tools needed to help you find the best solution for their situation. Often, when other options have been exhausted, CDPEs can help homeowners avoid foreclosure through the efficient execution of a short sale. Click here to contact me!
