How to Do a Short Sale

When financiers agree to go through with a short sale in real estate, it means the lender is accepting a lower amount than the total amount due. There are, however, drawbacks to a short sale. Experts recommend that all borrowers: procure legal advice from a real estate lawyer, and; call an accountant to talk about the tax ramifications of a short sale. Though all lenders have different requirements and may ask a borrower to submit a wide array of documents, the following steps will go far to prepare a seller for a short sale. You may have to make a number of phone calls before you reach the person responsible for short sales. Do not settle for the “real estate short sale” or “work out” department; rather, get the name of the supervisor or individual capable of making a decision. Prepare a letter of consent ahead of time giving the lender permission to discuss your personal information, which should include: property address, loan reference number, your name, the date, and the name and contact information of your agent. Prepare a preliminary net sheet, or an estimated closing statement that reveals the sales price you expect to net and all the costs of the sale, unpaid loan balances, outstanding payments, and other fees. Write a hardship letter — do not be afraid to pull out all the stops — explaining how you got yourself into this financial bind and asking the lender to kindly accept less than full payment. Lenders will want to know about all of your income and assets, so it is best to be as truthful and transparent as possible so the lender understands your inability to repay. Clearly explain to the lender such bank statement line items as unaccountable deposits, large cash withdrawals, or an unusual number of checks. If these steps are taken and everything goes smoothly, the lender is likely to approve the short sale. | Read More