Statistics tell us that, nationally, about 25% of homeowners owe more than their house is worth in today’s market. Obviously this means that the majority of them are not going to want to sell their home, as they would have to take money to the closing table to clear the balance on their loan. But some home owners do not have a choice on whether or not to sell: they may have been transferred with their job, be going through a divorce, or simply may no longer be able to afford the payments. In these cases, a short sale may be the answer to their dilemma.
What is a short sale?
A short sale means that you sell your home for the best price available in the current market, and ask the lender to accept the lower amount in full settlement of the mortgage debt.
The short sale process can be confusing, but it basically comes down to three key stages:
1. Prepare Your Case: Although there are signs that changes may be in the offing, at the moment it is necessary to prove to the bank that you are suffering “hardship”. This may be due to a number of reasons, including the loss of a job, illness, death in the family or a divorce. You must also prove this hardship to the lender, so you need to gather a number of documents such as pay slips, tax records and bank statements, and write a letter describing your circumstances. Most lenders have a package that they can send you, detailing their specific requirements.
2. Start the Process: You need to submit all the documents to the lender and list your home for sale. The listing agent will prepare an assessment of current market value, called a BPO (Broker’s Price Opinion) and will add that to the details provided to the lender. The lender will also carry out a BPO to confirm an appropriate selling price.
3. Sell the Home: Your listing agent will market the home and bring your any offers that are received. Once a contract has been ratified it will be sent to the bank for approval. Although the sale has to be
agreed by the seller, it cannot be completed until the bank has signed off on it. This stage, lender approval, can take up to 2 or 3 months, so potential buyers need to be prepared to wait.
So, the short sale process is not easy, but in many cases it is the best answer for anyone who is upside-down on their loan. The key is to use an agent with local knowledge and who understands the special needs of the short sale process.
If you owe more than your house is worth, If you are behind in your payments, I may be able to help. Call me to find out how you may be able to sell your home at no additional cost to you. Chris (540) 538-9928.