What makes a successful short sale?
It's simple, everybody has to believe that they are a winner. - The Seller needs to know that they've gotten out of a bad situation with less credit damage and a new start.
- The Buyer wants to make a purchase of a property below the true market value, at least in the near future.
- The lender must believe that the short sale will net them more money than a possible foreclosure.
For Buyers: your interests are best served by a purchase at the lowest possible price that will be approved by the lender. For Sellers: There is no cash at the sale. We are just showing them a way out of a possible foreclosure action. Here's what you're looking for as the buyer in a short sale transaction: - A homeowner upside-down in their loan. Their home is worth less than they owe on it in various mortgages.
- Clear title and no prohibitive liens or claims against the property.
- Enough time to complete the process before foreclosure action.
- A willing seller with a desire to help in order to avoid foreclosure.
- A current valuation that will allow you to buy the home at a bargain price, creating instant equity.
- True hardship on the part of the seller to convince the lender of the necessity of a short sale.
- If VA or FHA, the situation meets their criteria for short sale.
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Short Sale Package: All of the documentation needed to start a short sale is commonly called a "Short Sale Package" and is usually submitted by the investor interested in the property, the agent representing the seller, or the seller of the property. The package usually includes the following items: Sample Short Sale Package (items may vary depending upon the lender): - Cover Letter
- Authorization to Release Information
- Sellers Hardship Letter
- Seller's Financial information
- 2 years w2's
- 2 months pay stubs
- 2 months bank statements
- Supporting Hardship Info - HOA liens, medical/disability statements etc.
- Repair Estimate for the property
- Comparable sales for the property
- Contract
- Net Sheet
- First mortgage holder may ask for a payoff amount from the 2nd
- Second mortgage holder may ask for a payoff amount from the 1st
- Lender may ask for an Initial Title Report
- FHA and VA may have their own forms and special requirements as well
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Be Prepared to Wait!
Short Sales can taken an awful long time to complete,
making it frustrating for both the Buyer and Seller. What is the timeline to complete the Short Sale Process? - Not all banks or lenders are equal, some are much quicker than others but on average the time the offer is sent from the listing agent to the bank, Realtors can expect to hear back between 45 to 90 days to respond to the initial offer, and even longer for the approval.
- When an offer is sent on a short sale home, make sure the Listing Agent sends all the required documents. That is why an experienced real estate professional can take care of every step in the process.
- Many of the banks have an overwhelming amount of short sale requests to process and do not have the employee power to quickly process each and every one of them.
There are some great short sale deals in the marketplace! But be clear to yourself, short sales can take a long time to process,
and an open ended time frame is imperative in the majority of cases.
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Many Short Sales are well worth the wait!
They can be a "Win Win" for both Buyers & Sellers. Remember: Each Lender has their own requirements and standards. That is where an experienced Real Estate Professional can be your greatest asset. |
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