What is a Short Sale?
Many homeowners who are facing foreclosure are curious about what a short sale is and whether it is the right choice for them.Â A short sale is a negotiated agreement between a lender and a seller whereby the lender agrees to accept less than what is owed on the mortgage loan in order to facilitate the sale of the home.Â In some instances, the lender will make approval of the short sale contingentl upon agreement by the seller to make a monetary contribution or to sign a promissory note for a portion of the short fall.
Because the lender must approve the short sale, the homeowner is required to prove to his lender that he can no longer afford to make his mortgage payments.Â To do this, the homeowner must submit a hardship letter along with supporting documentation.Â The documentation most lenders require includes:
Depending on the circumstances, the lender may require additional information such as medical bills, divorce papers, or theÂ death certificate of a spouse or co-borrower.
Additionally, most lenders will not even consider a short sale request if the home has not been listed with a licensed real estate agent.Â So, it's best to hire an agent early and present a copy of the listing agreement toÂ the lender immediately.
What Happens Once the Seller Accepts an Offer?
Once the seller accepts an offer, the deal must be reviewed and approved by the seller's lender.Â The fully executed purchase and sale agreement, proof of the buyer's funds to close or pre-approval letter, and a draft of the HUD-1 settlement statement will be transmitted to the lender by the seller's authorized representative, usually the listing agent.
How Long Does the Review Process Take?
The short sale review process can be as short as a few weeks or as long as several months.Â For this reason, it's imperative that the purchase and sale agreement contain the appropriate contingenciesÂ protecting both the buyer and the seller in the event the review process takes quite some time or the short sale request is denied.
If you are facing foreclosure and have questions about short sales, contact me at 678-446-5925 or visit http://GeorgiaShortSaleCentral.com.