Juli Doty - Real Estate, Real Advice

Short Sales

What is a Short Sale?

A short sale happens when your lender agrees in writing to allow you to sell your home for an amount less than you owe.

Why Would a Lender Accept a Short Sale?

Foreclosure is surprising expensive for lenders. They often agree to a short sale when the only other choice they have is to foreclosure. The short sale process allows them to close the current loan without the expense of foreclosure, maintenance, insurance, taxes and closing clots while they attempt to sell the house themselves, after you have been evicted.

A short sale in real estate is not easy, but it can frequently be done.

How to Do a Short Sale

• Obtain legal advice from a competent real estate lawyer
• Call the Lender: It make take a number of calls to your lender to obtain the name and contact numbers for the person in charge of handling short sales.
• Submit Letter of Authorization: Write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan.

  The letter should include the following:

  • Property Address
  • Loan Reference Number
  • Your Name
  • The Date
  • Your Agent's Name & Contact Information
  • Your dated signature
• Estimated Closing Statement: This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale. A sample ECS is available in the JuliDoty.com Real Estate Library under SELLERS.
• Hardship Letter: Be honest. Lenders are human beings who understand hardship. Tell them the honest truth, whatever it is. This is not the time to allow your pride to impede progress.
• Proof of Income and Assets: Once again, be honest about the good, and the bad. Your lender will provide a pre-printed form for you to fill out.
• Copies of Bank Statements: Describe deposits, large cash withdrawals or an unusual number of checks in a cover letter to your lender.
• Comparative Market Analysis: If your home's value has fallen since you purchased it, have your real estate agent can prepare a CMA for you, which will show prices of similar homes:
  • Active on the market
  • Pending sales
  • Sold in the past six months
• Purchase Agreement & Listing Agreement: Your lender will require a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.

Be aware that the more complete your package to the lender, the more likely they are to say yes. You might also request the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request.