How to Do a Short Sale
A short sale in real estate occurs when the outstanding obligations (loans) against a property are greater than what the property can be sold for. Short sales are a way for homeowners to avoid foreclosure on their homes and still be able to pay off their loan by settling with lender.
Benefits for Short Sale
Of course, you will make your real estate agent happy because agents are happy to take listings. But what about you? What do you get out of a short sale?
- Retain some dignity in knowing that you sold your home.
- You won't suffer the social stigma of the "F" word: foreclosure.
- No mortgage payments to make, unless you choose to make them.
- You can meet the new owners.
- You will be eligible, under Fannie Mae guidelines, to buy another home in 2 years instead of 5 years.
- If your credit report does not reflect a 60-day+ late pay, under Fannie Mae guidelines, you will be eligible to buy another home immediately.
Should you find yourself in a serious finacial problem, no longer able to afford to make your mortgage payments, you might want to consider attempting to do a short sale. If you're allowed to execute a short sale, your mortgage lender has agreed to accept an amount less than the full outstanding balance of your loan as payment in full. As a better alternative to bankruptcy or foreclosure, a short sale may or may not be possible. Your mortgage lender must approve your request, after you've submitted a number of documents to them.
Contact a Realtor to get a review of the market for similar homes in your area.
Contact your present mortgage company and request short sale paperwork. You will need to find out at this time if they accept short sales.
List your home with a Realtor. If you already have an interested buyer you can bypass this step in the process.
Wait until you have received at least one offer on the home before moving on to the next step.
Complete short sale paperwork and return it to the mortgage company for review. Short sale paperwork generally requires information regarding how much interested buyers would pay and information about the home listing with the Realtor, such as MLS number.
Wait for the mortgage company to review and approve the submitted paperwork.
If short sale paperwork is approved by the mortgage company, contact the Realtor the home is listed with and have them process the sale of the home.
Initially request a Short Sale without Recourse. This allows you to pay off less than the amount owed without the mortgage company suing you for the difference in price. If you do not get a Short Sale without Recourse you will still owe your mortgage company the difference between the sale price and your payoff amount.
Not all mortgage companies will accept short sales or short sales without recourse.