6 Essential Steps for Completing a Short Sale on Your Property
A Short sale is an alternative solution for a homeowner to pay an outstanding loan. A short sale in real estate can take place when the unpaid outstanding loan is greater than the actual market value of the property.
With a short sale, the credit score of the homeowner (or the seller) is left untainted by avoiding foreclosure or bankruptcy which significantly affects future loan transactions. In fact, both lender and homeowner are able to do away with the long process of foreclosure and bankruptcy before the property can be put on resale.
Here are 6 Essential Steps for Completing a Short Sale:
If you have exhausted all other options to save your property and you are not making any progress, evaluate your chances of getting a short sale approved. You may sell your property on your own or hire the services of a real estate broker.
- Know the Value of Your Property: by initially doing a market research in your area or get the help of a real estate agent to do the CMA (Comparative Market Analysis). A real estate broker can easily verify the current value of your property.
- Calculate Costs Associated with the Sale. Anticipate the costs associated with selling your property like advertising costs, broker fees, commissions, legal fees and closing costs. Add up all the costs to estimate how much a short sale will cost you in the end.
- Add and Subtract. Determine the total amount loaned against the property. Subtract it from the properties estimated selling price. With a short sale, expect a negative result. This becomes the basis for whether or not short selling the property is helping both you and your lender.
- Look for a Buyer. A willing buyer will help convince your lender. Be sure that your buyer has a clean credit score. Remember that your buyer will pay off the acceptable amount you owe to the lender and get your property as a new mortgage. If your lender accepts, then you are off the hook while the buyer gets off with a discounted property.
- Speak to Lenders. All things considered, present your proposal of a short sale to your lender. Lay down the facts related to your property and to the short sale. Manage your expectations. You may have to speak to few lenders before you find the one that will accept the deal. Majority of lenders do not accept second mortgages.
- Sell the Property. Make sure that the contract between you and the buyer is already drawn. This will be collected by your lender. The amount printed in there must be the exact amount to be paid to the bank.
At some point during your negotiations, you may have to prove that a short sale is your last option as you are incapable of fulfilling your mortgage obligation, by presenting your financial situation. Never go into a short sale without all your ducks in a row. Short sales are very difficult to get accomplished, but you will have a nice advantage if you are organized.
