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A successful short sale requires a lengthy process, one that is best initiated early on in order for all parties involved to resolve the issue to satisfaction. The entire short sale process can take anywhere from three months to a year or more when considering the many negotiations needed before the actual sale. A qualified and knowledgeable REALTOR®, attorney, and accountant will be invaluable assets for anyone seeking a short sale, helping to make sure communication is expedited to see the process resolved to the benefit of all parties involved.
The short sale process may vary according to your state but the following information is a general guideline of what you can expect.
1) You must be considered in a distressed state, most often with the home entering the foreclosure process, but many lenders are now willing to negotiate a short sale even if your mortgage payments are current. Proving your financial situation is rapidly deteriorating to your lender may help them reconsider allowing a short sale of your property. Always contact your lender immediately if your financial situation dictates that a short sale or foreclosure situation is imminent.
2) In order to prove to your lender that you are not able to make your mortgage payments, you must gather documents of proof of your financial hardship. These documents are similar to those you may have used initially to qualify for your home loan, but this time you are proving that you would disqualify for the loan. Additionally, a letter explaining the cause of your financial hardship should be written. Be honest and be thorough. Your lender is likely to understand the request for a short sale if you are detailed in why you can't afford your payments when you are descriptive and sincere. These documents, combined with market trend reports, market analysis, and any other useful information that can help your lender decide why your request for a short sale should be granted.
3) If your lender agrees to accept a short sale, your home must be placed on the market and evidence of a concentrated effort to sell the property at market value must be provided. Your lender must receive detailed information about the effort to sell your property, another advantage of hiring a qualified REALTOR® to aid in the short sale process.
4) Once you have found a buyer for your home, the purchase contract and other documents are provided to your lender for approval. If your lender accepts the offer, the sale of your home continues in the same way as any other real estate transaction.
In most instances, your lender will pay almost all of the fees and commissions required by all of the parties involved in the process, leaving you to pay nothing. However, your lender may require you to pay for any appraisals or back dues owed to a homeowner's association. In no instance are you allowed to complete a short sale with any form of financial gain or proceeds.
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