Short Sale
According to Wikipedia, “A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers.”
If you have decided that a short sale is in your best interest, it is imperative to get the house on the market as soon as possible, since the first thing the note holder will require is a executed contract.
Documents that will need to be submitted to the Asset Manager (Note holder representative) in a Short Sale Package will include all the following:
- Copy of fully executed contract. Obviously, the negotiated sale price will be lower than the amount of your mortgage.
- Hardship Letter. This is written by the property owner, explaining why the owner cannot make the payments.
- Copy of the last two years tax returns
- Copy of the last three months pay stubs
- Copy of the last two months of bank statements
- Written authorization for your attorney to contact the bank and negotiate the short sale
- HUD-1 Statement prepared by an Escrow Company
- Copy of the last two months mortgage statements (for the first and second loan if applicable)
- Copy of the listing agreement
- Complete list of all debts including monthly expenses
- Copy of 401k and retirement plan(s) statements
- Broker Price Opinion prepared by your realtor
- Sales commission provided by your realtor for both the buyer and seller agent
- Back title: includes your deed, the survey and your title insurance policy
The sooner you have all of this information compiled and sent to your attorney, the better. If you want to contact the bank before hiring an attorney you can do that too - the department you want to contact is Loss Mitigation. An experienced Real Estate Attorney is highly recommended to negotiate the short sale because this is a legal process and it important to safeguard your personal financial information. If you decide to use a Realtor or Short Sale Negotiator be sure that they have a privacy policy that explains how your personal information will be used. The Real Estate Commission and reasonable Attorney fees will be calculated into the total debt resolved by the short sale.
