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.