Short Sale Process

What is a short sale?

Stated simply, a short sale occurs when a lender or bank enters into an agreement with a borrower to accept less than the full balance of their loan at a sale. The borrower owes more on the home than current market value making it nearly impossible for them to sell the home without taking a loss. In times past, bank short sales were a rare occurrence. What bank after all is willing to take less than the amount borrowed for the sale of a home? Well it turns out quite a few. Especially these days when foreclosures are at an all time high and many individuals simply cannot afford to keep making their mortgage payments.

Who qualifies for a bank short sale?

The specific qualifications vary; however, individuals who can no longer make their monthly payments and are experiencing financial hardship may qualify to sell their home short.

The Short Sale Process:

Submit a request to sell short. Before any home sales can begin, the homeowner must submit a request to their lender seeking approval to sell their home for less than they owe on their mortgage. Generally at this time, they will submit a short sale package, which includes the listing agreement, executed purchase offer, the buyer’s letter of pre-approval and any supporting documents for the homeowner (financial statements etc.). The seller must provide adequate documentation including pay stubs, bank statements and other financial hardship evidence to encourage their lender to accept their request.

Purchasing a Short Sale

If you are buying a short sale, have patience because the process is more complex and may take longer than a conventional home purchase. Offers placed on the home are approved, countered or rejected by the lender, not the homeowner, and ultimately the lender’s goal is to recoup as much of their initial investment as possible.

Short Sale Tips

• Foreclosure can still occur during the short sale process and postponements are not guaranteed so pay close attention to foreclosure dates.
• Check for additional liens. Some homeowners will owe additional debts, which have become liens against their property. Investigate all potential liens before initiating a short sale.

Short Sales in East Lansing Michigan

If you have any questions about buying a short sale home or selling your home short, please contact me at MyRealtorRob. As a seasoned realtor in East Lansing and Lansing, I have dealt with a variety of short sales and understand the ins and outs of the process.

Find more information about short sales at KnowYourOptions.com.