For sellers who have considered their options and are choosing to pursue a short sale, many questions remain.
Why would a lender agree to a short sale?
Many factors affect a lender’s decision to agree to a short sale. Foreclosures take time and are rather expensive. A short sale on a property may make better business sense to a lender. Also, federal and state governments have been urging a reduction in foreclosures which makes short sales a preferred alternative in some instances. Remember, short sales are not automatic and are decided upon on a case-by-case basis.
One thing is for sure. If a foreclosure has already occurred on a property, a short sale is no longer an option.
Once a seller decides on a short sale, engaging the right professionals is the next step. Sellers should locate real estate professionals who have training and a track record with short sales. As with any professional relationship, sellers should beware of those who offer to take control and easily get them through the process. It is complicated and takes time and expertise to succeed at short sale transactions.
Sellers may also need to consult with an attorney or tax professional at various times during the negotiation and before the final agreement with the lender. Realtors® are not accountants or attorneys.
Finally, sellers need to prepare to disclose their whole financial picture to their real estate professionals and to their lender(s). They will be providing a hardship letter in some instances as well as financial documents, pay stubs, tax returns if self-employed and any relevant details regarding their current financial situation.
What if there is a second mortgage or home equity line against the property?
Shorts sales are still possible. The second lien holder should be notified at the same time as the principal lien holder because all lien holders will be involved in the negotiation and will require the same information from the seller. It makes sense to work with all of them together at the same time. If there is mortgage insurance on the property, they, too, will need to be notified. A well-trained, experienced Coldwell Banker agent can help organize all these details.
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