â€¢ Lender's consent and approval required.
â€¢ The lender accepts the sale as payment in full for the loan.
â€¢ The property owner escapes foreclosure, but receives no funds from the sale
â€¢ There can be no equity in the property
â€¢ Seller cannot bring money to the closing.
â€¢ Lender does not report foreclosure to the credit bureaus.
The lender will require various documentation. The incentive for the lender is to remove the account from their books before the loan becomes a problem. It can also cost a lender $25,000 to as much as $50,000 in order to send the property through the foreclosure process. Technical requirements for a short sale: (May differ from lender to lender)
â€¢ Owner must demonstrate hardship/financial insolvency (i.e. loss of employment, illness, divorce, catastrophic illness, death of a spouse).
â€¢ Seller must prepare a hardship letter asking lender to accept short sale.
Documentation that may be required by lender to determine if owner qualifies for a short sale.
â€¢ Listing agreement with Realtor showing the property is on the market for sale.
â€¢ Comparable market analysis which includes sales and listings
â€¢ Bank statements
â€¢ Pay stubs
â€¢ Tax returns
â€¢ Purchase/Sale Agreement
There are drawbacks to the short sale.
â€¢ A deficiency balance could be charged off which could result in negative credit bureau reporting.
â€¢ If the cancelled portion of debt exceeds a certain amount, the homeowner is required to report the forgiven amount as income on his or her tax return.
As always, any property owner should seek legal and financial advice before entering into this type of transaction.
If you would like more information on Short Sales, please contact me.
Tammy Hayes, Realtor, Sandals Realty, Punta Gorda, FL 941-276-6185 email@example.com
You need to connect with an experienced Short Sale Realtor who is advising you in the right way, and prepares you for what can happen along the process...
Good Luck to you!
Edith YourRealtor4Life and Chicago and Northshore Connection
Working always in the very BEST interest of her clients
What a great question. The answer is very simple.
When a house is for sale and the proceeds from the sale will NOT pay off the mortgage, is is "Short".
Therefore, it is known as a short sale.
To a home buyer this means that you will still have a purchase and sales contract like on any home. However, now the seller is removed from the approval process and the bank is in charge. Plan on waiting 120 days for an answer. The actual number of days can be less or it could be more, NOT EVERY BUYER is suited to buy a short sale. Some Can Not wait that long.
Note: All sales...a normal buyer to seller, a short sale or a bank owned sale ALL need to be at fair market value and guess what...the whole market is on SALE!!! Who does not love a sale.
Best of luck to you.
Debbie Albert, PA
Keller Williams of the Treasure Coast
Keller Williams Realty
"What Every Buyer Should Know About Short Sales"
"The 4 Foreclosure Related Real Estate Opportunities"
As a buyer, you want to make sure you have a buyer broker who is expereinced in short ales to guide you through the process. As a seller you would want a listing agent experienced in short sales and proven they can get them done.
Please see my blog with tips and advice on how to get a short sale approved and tips for buying them
There really is no mystic about a short sale which is simply the sale of a property in which the sale price is lower than the amount due on the loan, or loans, taken against it. These contracts are always contingent on the lender, or lenders, approval and can be frustrating and time consuming. This process can be better for both the seller and the bank; the seller avoids foreclosure which causes severe damage to their credit standing and future ability to borrow and the bank avoids the expense of foreclosure.
One thing to watch out for is the short sale does not necessarily release the borrower from the obligation to pay the note so it is important that they seek a release for future deficiency judgements.
I hope this information is helpful but if I can offer anything additional please feel free to contact me at your convenience.
Always at Your Service,
Tom Priester e-PRO
"Results Driven Real Estate"
Keller Williams Realty
Keep in mind when you short your home the short sale agreement does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency
Home Run Real Estate
Short sales can be very good deals but if patience isn't a virtue you possess they may not be for you.
If I can answer any other questions feel free to contact me.
Have a great night!