29 Aug Tips for a Successful Short Sale
Short sales have become the solution of choice for homeowners who can no longer afford to stay in their house. It allows them to sell their property for less than the principal balance while avoiding a foreclosure. Short sales have also helped buyers into homes that just a couple years ago might have been out of reach. Despite a rocky start, both lenders and the federal government have pulled out all the stops to ensure short sales are successful – and timely – for both buyers and sellers.
By knowing the answers to these questions ahead of time, you can help simplify the process:
- What’s the foreclosure timeline? The earlier you start the process and paperwork, the better. That ensures the buyer will have financing in place and can close in time.
- Who owns the lien(s)? With as many times as some paper changed hands, this may be easier said than done. The best place to start is with the loan servicer(s) – the company who the checks are written out to. Make sure you account for lines of credit and seconds or thirds!
- How much is the property worth? Check the bank’s numbers against recent comps, and don’t be afraid to ask for a review if there’s a significant gap between the two.
- Do you have all the necessary paperwork? Typically, you’ll need a Letter of Authorization (allowing the agent to speak on the seller’s behalf), Listing Agreement, Purchase Contract, Short Sale Agreement, HUD Estimate, Lender Approval(s), as well as pay stubs, tax returns, and bank statements. If either party qualifies for lender and/or federal assistance, additional applications and documentation may be necessary.
- Do you plan to move before closing? Many lenders require the borrower to occupy the home until the short sale is complete.
Successful short sales can lead sellers and buyers down fulfilling new paths, both financial and psychological. By setting out a map early in the process, they can minimize or avoid any dead ends or detours along the way.