|
FOR SELLERS FOR BUYERS
In a short sale, the seller arranges with their mortgage lender to accept a price that's less than the amount they owe on the property. As part of this arrangement, the lender typically agrees to forgive the rest of the loan. As a result, the seller doesn't have to go though a foreclosure, the buyer picks up a property at a discount, and the lender avoids taking on the burden of unloading the property.
Who pays the expenses (commissions and closing costs)?
Fees are generally paid by the lender out of the sale proceeds making our service free of charge to you. Lenders are willing to do this because if they have to foreclose, they still would have to pay a broker and closing costs to sell the property.
What is required of me for a Short Sale?
1. Call the Lender(s), you can call the Customer Service Numbers on your Statement and ask for the “Loss Mitigation” department, most banks today would have the customer service reps handling the process and noting everything in the files until and even after a negotiator is assigned to your file.
2. You would need to submit Letter of Authorization to the Lender(s) as Lenders typically do not want to disclose any of your personal information without written authorization to do so. We will help you with this; the letter should include the following:
· Property Address
· Loan Reference Number
· Your Name
· The Date
· Your Agent's Name & Contact Information
3. Prepare a Hardship Letter; the sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, have a serious illness or other setbacks that make it difficult to cover your expenses.
4. Proof of Income and Assets, It is best to be truthful and honest about your financial situation and disclose assets. Lenders may ask for the past two months of statements for savings accounts, money market accounts, any stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
What will my Realtor do for a Short Sale?
1. Purchase Agreement & Listing Agreement; when you reach an agreement to sell with a prospective buyer, the lender(s) will want a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections
2. Preliminary Settlement Statement; this is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions. There should be no cash to the seller or the seller can bring funds to the closing is necessary.
3. Comparative Market Analysis, sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes that are Active on the market, Pending Sales and those Sold for the last 8 months or so.
Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to do this.
What is a Short Sale for Buyers?
In a short sale, the seller arranges with their mortgage lender to accept a price that's less than the amount they owe on the property. As part of this arrangement, the lender typically agrees to forgive the rest of the loan. As a result, the seller doesn't have to go though a foreclosure, the buyer picks up a property at a discount, and the lender avoids taking on the burden of unloading the property.
Is a Short Sale a Bargain?
There are three types of Sellers in the current Real Estate market with Short Sales and Foreclosed (Bank Owned) properties making up the bulk of properties offered for sale.
· Regular sales; are often the higher priced properties with the sellers being limited their mortgage(s), even those with low or no mortgages are expecting to net an amount that they are unwilling to go below.
· Short Sales (Pre-foreclosure); are often priced below market as it takes an offer of contract to commence a Short Sale therefore the seller will present an accept an offer without bias putting the burden on the Lender(s) who would consider the offer if it is reasonable and is backed up by a BPO (Brokers Price Opinion).
· Foreclosure (Bank Owned); these are often a great value that is equal to or better than a short sale, however often times these properties, being neglected for some time can be in distressed condition or can be fixed up by the Lender to be in great condition.
Are there drawbacks to buying a Short Sale?
The major drawback in making an offer of purchase in a Short Sale is that you can wait for months and end up with the Lender not approving the sale, lately there are cases in which first mortgage has approved the sale and the second position lender would not give an approval. However if you have time to wait you can still get a home that is a great value.
Please fill out this form for more information
|
