Tuesday, August 12, 2014

The REAL reason short sales take so long


Sellers should understand what to expect anytime they are interested in placing their home on the market. First of all selling any home can be a somewhat lengthy process whether it is a short sale or more traditional situation - what you might refer to as a “normal” sale. There are many different entities involved in a real estate transaction including the seller, the buyer, the title company, real estate agents, lenders and more. Each of the involved parties has different responsibilities and coordination is a major task even in the best case scenario.

A property that is being sold as a short sale is a property that is being sold for less than what is owed to the bank or lender. In other words the seller needs the mortgage holder’s permission to accept an offer. It’s easy to understand that this extra requirement can add even more time to the process of selling a home.

The first step that needs to be taken by a homeowner seeking short sale approval is to complete what is usually referred to as a “short sale packet” provided by their lender. This also requires a “hardship letter” that must explain in detail why the homeowner is no longer able to make their mortgage payments. The bank must be absolutely convinced that they will lose less money by allowing the property to be sold for less than its value than they would if the current occupant remained in possession. Foreclosures can be quite expensive for the lender and in the end a short sale might actually be less costly.

Next the home owner will be required to provide sufficient financial records to substantiate their claim as to not being able to pay for the home. This will also include a preliminary net sheet listing all of the details of the sale of the home including the expected sale price and all of the costs associated with the sale. The lender needs to know what they can actually expect to “net” after all is said and done. Obviously they can make no decision without this information. The seller’s real estate agent should be able to obtain the necessary documents that the bank will require.

Another requirement that must be met by the person seeking the short sale of their home will be to provide the lender with verification of the home’s current market value. This could (and usually does) include the submission of a market analysis and price opinion from several local real estate agents to confirm the estimated value of the home. 

Keep in mind that all of this must take place before the property in question can even be placed on the market. This is when the standard paperwork begins in order to offer a home for sale. As you can see all of this takes time and even though the process is referred to as a short sale it is not done in a short period of time. This does not mean that distressed homeowners should not consider a short sale if they are in a situation where they can no longer afford to make their mortgage payments. Many times a short sale is the perfect solution for persons in this position.

My advice is to obtain an experienced realtor that can guide you through the many steps required to obtain approval and more importantly to “get out from under” a home that you can no longer afford. This is one situation where experience counts and patience is a virtue.

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