Home-Buddies

Selling vs. Short Sale

Selling your home is not the same concept as doing a short sale on your home. If you are attempting to just sell your home, you are usually expecting to receive an offer that is sufficient to pay off your total current mortgage balance(s) and also give you some extra cash. You are not doing any negotiating with your mortgage lender in order to just sell. But with today’s real estate market, it’s likely that your home isn’t selling within the time frame you originally planned on. Maybe the value of the homes in your neighborhood has gone down so drastically that now you need to consider selling for less than what you owe on your mortgage. Now you need to do a short sale.

The short sale is going to be different than just selling. You will seriously need a real estate agent who is very, very experienced with short sales. You and your agent will be negotiating with your lender(s) to accept less than what you owe on the loan. The lender forgives the remaining balance of the loan. You are mainly trying to sell quickly, and you WILL NOT get any money out of the deal. All the money will go to paying the closing and paying off the lender(s).

Here’s what you need to do for a short sale:

1. Get a real estate agent that is very experienced with short sales.
2. Make sure that your property is listed.
3. Have a 3^rd party authorization ready for your agent and/or other parties that will need your permission to speak to your lender on your behalf.
4. Call your lender(s) – be sure you speak to someone directly in loss mitigation or short sale department. Or speak to a supervisor.
5. Make sure that you write down everything that the lender is going to tell you that they need from you. They may even send you an actual short sale application and/or package.
   1. Hardship Letter – this letter will let the lender know why you need to do a short sale. Let the lender know what has seriously happened to you. Maybe there was some extremely serious injury/illness within the family, that in turn caused you to lose your job. Maybe your rates and payments have gone up too much due to ARM. Just tell the story and let them know how desperate your situation has become now.
   2. Proof of Income – or proof of a loss in income. Bank statements, tax returns.
   3. Expenses – how much are your monthly utilities, groceries, car payment, gas, phone, cable, etc. Have this paperwork ready!
   4. A value statement/BPO/CMA – this statement will show your property’s current market value. You may even include a summary of the condition of your property.
   5. Net sheet/HUD1 – will show exactly how much the lender(s) will end up with.
   6. Contract offer - the signed contract between the buyer and seller.

Once you begin your short sale process, try to have patience. Remember that you are trying to convince your lender to accept less than what you owe.

Make sure that you are always talking to the right person in the right department with your lender. Do not rely upon the lender to be following up with you regularly. Always make sure that you are following up constantly with the person who is assigned to your file. Don’t let several weeks pass by without knowing what the current status of your short sale is.

And in some extreme circumstances, if you feel that everything is just being stalled too much, it may help to have the buyer’s lender contact your lender. Having that lender communicate with your lender may help ease the mind of your lender. Maybe just hearing from that “big entity” that the money is ready and just waiting, will be enough of a nudge to get your lender to finalize the short sale.

Barbara Partaka
Home-Buddies