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SHORT SALE PROCESS A short sale is one of the options a homeowner may pursue when delinquent on his/her home loan. It is the sale of the house for less than the homeowner owes to the lender. For example, if a homeowner owes $150,000 to the lender but can only sell the house for $100,000, then that sale is a short sale. It is short of the amount owed. A homeowner should consult a CPA or other tax professional and an attorney in order to understand all the tax and legal consequences of a short sale. Each lender has their specific requirements in order to grant a short sale, generally the following is an outline of what the process will be. Homeowner is behind on his/her mortgage payment. In some cases the lender will not require the homeowner to be behind in thier payments. Provide lender with the following information – Financial form, hardship letter, copy of 1 month’s paystubs and copy of latest bank statement(s). Some lenders may require additional information, particularly if you are self employed. Speak with your lender and ask if they will cooperate with a short sale, if so what information do they need to see with an offer in order to consider it? Ask if your lender will pay a real estate commission, if so how much? List your house for sale. Once you receive an offer, submit it to the lender along with all required information including a preliminary HUD1 or net sheet. Be prepared to show the lender why the offer is a good offer in your market place. Once the lender has approved the offer and sent the approval letter, read the terms carefully. Know what the terms of the short sale are and how it affects you. Are you responsible to repay the difference between what is owed and what the property sold for? Who is paying the real estate commissions? Is the lender paying requested buyer’s closing costs? Or other fees? Once buyer, seller and lender agree to the terms of the sale, escrow is opened. Escrow will proceed as with any other sale. Allow extra time for a short sale transaction to go to escrow. Currently in the Phoenix Metro area most short sales are taking between 4-6 months from the time an offer is received to the time escrow closes. |
