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A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens' full amounts, whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency.
Short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically agreed to between the parties. A short sale is often used as an alternative to foreclosure because it mitigates additional fees and costs to both the creditor and borrower; however both will often result in a negative credit report against the property owner.
As many as one in four homeowners are "under water" with their mortgage. Distressed homeowners find the sea of information overwhelming and confusing. Refinancing or loan modification can be an alternative to some. However, if you have exhausted these avenues and still find yourself falling short of affording your home due to a hardship, it may be time to consider the short sale solution. Do not wait until you are facing foreclosure, contact us and talk with a Certified Distressed Property Expert (CDPE®). Take action now to expedite the short sale process.CLICK HERE TO GET STARTED
Short Sale Defined
A short sale occurs when a negotiation is entered into with the homeowner's mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then "sold short" of the total value of the mortgage. Short Sale Eligibility Questions - For homeowners to qualify for a short sale, they must fall into any or all of the following circumstances:
- Are you failing to meet your mortgage obligation because of a financial hardship? Examples: increased payment, job loss, decreased income, excessive medical bills.
- Can you demonstrate the Hardship and how it has affected your ability to meet your mortgage obligation?
- Do you have Monthly shortfalls? Example: Total monthly expenses are greater than the monthly income, resulting in a financial shortfall every month.
- Do you have liquid assets that could be allocated to pay down the mortgage or are you insolvent?
Preparing for Our Visit
We will need the following documentation to demonstrate to your lender that you qualify for a short sale and please continue to save the newer items as they arrive.
- Two months of recent mortgage statements (all mortgages)
- Two months of checking account statements (all borrowers if separate)
- Two months of saving account statements (all borrowers if separate)
- Two months of other account statements (all borrowers if separate
- Last two paycheck stubs (all borrowers)
- Two years tax returns Hardship Letter (we will provide samples)
- Financial Worksheet (we will provide a worksheet form)
- Any other documentation that will help your agent prove your hardship
Property Care for Media and Marketing
As with a traditional home sell, your property will be listed and must compete with other homes in the market place. Price and condition are extremely important. Remove clutter and trash. Repair nonfunctioning items Paint if needed. Do a thorough cleaning of the home, including an exterior wash. Spruce up the curb appeal, mow, trim hedges and clear leaves and debris.