Short Sale Information
The Short Sale Process
Basically, The definition of the short sale process is when the lender of a property allows the property to be sold for less than the amount due on the mortgage loan.
The benefit to a short sale process is that it allows the seller to avoid the credit report damage associated with a foreclosure. A foreclosure can stay on your report for ten years. A Short Sale will also be a negative on your credit report but not as severe. It will generally be for a much shorter period.
The Pitfalls of the Short Sale process must also be considered. The I.R.S. may consider any debt foregiveness to be a taxable event. Also lenders can pursue a borrower for the defiency balance. This depends on your state laws the type of the loan (Home Equity Line Of Credit, Refinance,Purchase Money) and the wording on the final negotiated lender or bank acceptance.
In some cases you may be able to avoid taxation if you can prove you are insolvent. New legislation has addressed some of these issues for owner ocupied properties.
The Short Sale Process
The short sale process will vary from bank to bank. It is not an easy process and it takes time. The following steps will outline the process.
It is your call but I would suggest that you list your home with a competent RealEstate agent who has experience CLOSING short sales. Then the agent will be able to present your case to the lender or bank and get the property marketed to get it sold.
1. Your agent will contact your mortgage holder and get their fax number to loss mitigation. This is where your Short Sale Documentation will be sent.
2. You will need to sign a Letter called Authorization to Release Information. This document will allow your agent to talk about your account and relay required information to the lender.
3.The agent will then put a complete short sale package togeather to submit to your mortgage holder. This packsge will include bank statements, tax returns and a financial statement and other documentation.
4. The seller will complete a harship letter which will state your financial difficulties. Once all the documentation is compiled it will be sent to the mortgage holder.
5. The lender will start to process the file. A appraisal or brokers price opinion will be ordered. This will give your mortgage holer an idea of value and property condition.
6. Once an offer on the property comes in on the property it will be sent to the mortgage holder. It will be reviewed to determine if the sale will give them the amount needed to close the deal. A bank will generally net more with a short sale compared to a foreclose. The foreclosure cost is expensive to the bank. The key is a clean offer on the property.
The Short Sale process is complcated because of the documentation required. But if done correctly, it can be a win-win for all parties involved. The lender avoids the foreclosure process, the seller avoids a foreclosure on their credit, and the buyer will get a good deal.
Suzie and I have the tools and experience to get short sales closed. We have some inside knowledge and tools and a great relationship with the top short sale negotiators in the business. We do business in Las Vegas. If you need help in other states please contact us. We can refer you to a good agent in your area who has this inside track on the short sale process. Thank You For Your Time and we hope you have a better idea of how the process works.
