Going Back to Short Sale Basics

To avoid foreclosure, a homeowner needs to explore all options available and try to determine which one will work to their advantage. Among the many options available, a short sale has proven to be quite effective not only in terms of stopping foreclosure but also in protecting your credit. Of course, before you choose this option, you will need to be familiar with the entire process involved in order to understand what you are getting into.

For the unfamiliar, here are some of the short sale facts you need to learn about:

  • Short sale transactions involve the lender approving the sale of the distressed property at an amount less than what is owed to them.

  • Homeowners with underwater mortgages, or owe more in a mortgage compared to the home’s equity, usually choose to sell via short sale.

  • A buyer’s offer is submitted together with the other short sale requirements, subject to lender review. The lender can choose to reject, accept or make a counter offer.

  • A short sale proposal includes all documents which support your claim of financial hardship such as income tax returns, statement of assets and liabilities and even pay stubs. You also need to submit a hardship letter, wherein you will explain in detail the circumstances which resulted to your decision to sell your home via short sale.

  • Short sales can be lengthy and complicated so, you need to make sure all lines of communication are clear in order to avoid delays. Work with a short sale Realtor and take advantage of their expertise and experience.

  • Buyers can suddenly change their minds especially if the lender does not respond quickly to the proposal. It is best to reassure buyers and keep them constantly updated.

  • More and more lenders are choosing a short sale over foreclosure because they incur fewer expenses. Homeowners should take advantage of this and make an effort to submit a complete proposal so lenders will have no reason to reject them.