5 Tips for Sellers on Short Sale Arrangements

If you are one of the many Americans trying to negotiate a short sale with the bank, you are undoubtedly facing some uncharted territory. In such a stressful time, it is easy to trust the first person giving you advice. However, at this time it is really important that you are careful of whom you take advice from, in order to protect your financial well- being and your credit as well.

When going through the process of being approved for a short sale, there are several things that you can do to keep yourself organized. Hopefully the tips below will help you to keep an accurate record so that you do not lose valuable information that you will need later on in the process.

Here are some helpful tips when you’re going through the short sale process.

1. Get everything in writing. This goes for anything that you think may come up in court or anything that you believe you will need to prove at a later date in time. If you are speaking with the lender on the phone, do not assume that they are your friend. They are there to get as much money as they can for the bank. Therefore, it is important that you ask to have information documented in writing. If the lender says that you are released of the debt, ask for a formally signed letter from them stating that your debt is forgiven.

2. Ask how your bank reports the deficiency – You should ask how your bank reports the deficiency to the credit reporting agencies. A Short Sale could show up on your credit report in several different ways, and you want to be aware of how this statement will reflect on your credit report following the short sale.

3. Keep accurate contact information – You should have a file of all of the contact information including the bank/lender information, the loss mitigation department contact who is handling your case, the Real Estate Agent, your attorney handling the Short Sale, and any other contacts who have been involved with your Short Sale.

4. Keep a Chronological File – This file should include events that have transpired since you first went into delinquency. You can keep documents in this file such as the home’s appraised value, documents of your late payments, and any letters that have been sent to you from your mortgage company.

5. Keep a Record of Phone Conversations – Keep a notebook handy by your phone and when you speak with one of the agents, be sure to write an accurate account of what was said so that you can refer to it later. Be sure that you date your conversation memo and file your information for future use. It is much better to have a written record of documented conversations rather than trying to go off of your memory.

Although going through the short sale process can be very nerve-racking at first, if you follow the guidelines above, you can help to alleviate some of the initial worry by becoming more organized and keeping accurate records for future use.

The Short Sale Process – What to do first?

If a home owner is behind in payments, wants to sell their home, and the house is considered “upside-down” where the amount owed on the home is more than the house value, than the lender may consider a Short Sale. There are several things that the seller/home owner must do when hoping to be approved for a short sale.

Contact the lender and ask to speak with someone in the Loss Mitigation Department. Normally there will be one person who is assigned to your account. Make sure that you keep your account number on hand so that they can quickly assist you. If you need to leave a message, make sure that you give them accurate contact information as well as your account information so that they can get back with you with answers to your questions.

Gather financial documents. The lender will ask the home owner for financial documents such as their income, outstanding debts, credit card payments, car payments, etc to determine their ability to repay the amount that is delinquent on the loan. Lenders use a formula to ultimately determine the financial status of the applicant and whether or not to proceed with a short sale on the home.

Prepare a letter to your letter which explains why you are in need of a short sale. Be sure that you let them know in detail, why you are not able to make payments on the home and why your home should be considered for a short sale. It is advisable to really emphasize on your hardship and let the lender know that you really do care about selling your home. If you lost your job, let your lender know this and provide proof. You can also request your outstanding mortgage balance from your lender. Do not assume that you already know what you owe. There may be other legal fees and interest added that you had not factored in your estimate.

Give your Real Estate Agent a heads-up that you are working with your lender on approving your home to be listed as a short sale. This will let your Real Estate Agent know that you are thinking of doing a short sale and they may have potential buyers that they know of who are in the market for investment type homes. They will also be able to market the home as a short sale once the bank gives the approval to go ahead in the process.

You will need to let your lender know who your property is currently listed with, and provide them a copy of the listing agreement and Real Estate Agent contact information. Communication is the key when working with your lenders and Real Estate Agents.