Guide to Seller’s Short Sale Process in Greenville, SC
Understanding Short Sale
A short sale refers to the sale of a property for less than the amount owed to pay off a home loan. It is an alternative to foreclosure when you have to sell the home because you can no longer make the mortgage payments.
You will get permission from the lender that holds the mortgage to execute a short sale selling the home for less than the amount owed to the lender. Lenders approve short sales because this can save them time and expense involved in handling and selling a foreclosed property. Whereas, you, the homeowner can avoid the negative impact of foreclosure on their credit rating.
Who qualifies for a short sale?
If you are in financial hardship you can qualify for a short sale. Acceptable hardships vary depending upon the lender’s guidelines. The following are commonly accepted:
– Reduced income in the family
– Job relocation
– Severe illness
– Divorce or separation
– Death in the family
– Military service
The Short Sale Process
1. Get a Property Valuation
The value of the property must be established right at the start because the lender will not likely approve a short sale if there’s enough equity in the property to allow it to sell, meaning, you must owe more on the mortgage than the home’s fair market value. It is easier to get the lender’s approval when the home’s value is close to the outstanding mortgage balance.
A real estate agent can prepare you a CMA or comparative market analysis to determine your home’s market value.
2. Hire a professional
A short sale has complexities not present in a typical real estate transaction. As such, you need an experienced and qualified short sale agent to help you accomplish a short sale. Hire a professional who sets a realistic price and who can effectively market and sell your home. A great and experienced short sale agent can also help to speed up the short sale process a little by staying on top of things and holding the lender accountable.
3. Contact the Lender
Your point of contact with the lender is in its loss mitigation department. If you’re late with your payments, an asset manager will already have information on your home and that person is the one you will speak with. Ask for the short sale package, an authorization letter allowing the real estate agent to speak with the lender. Some agents send the authorization letter with the short sale package and some prefer to submit the letter upon listing inception. Without an authorization letter, the real estate agent can’t negotiate a short sale. Note that your lender won’t talk to your potential buyer or real estate agent unless you’ve instructed them to do so.
Comply with all requests for information contained in the package, including the hardship letter. A hardship letter details the reasons why you are unable to continue making mortgage payments. This contains information about your earnings, an illness or the details of your hardship, or a plea to the lender which states your case and position.
A short sale package includes:
– your hardship letter
– authorization letter
– last 2 months bank statements
– last 2 years tax returns and W-2s
– last 2 months payroll stubs
– an estimated HUD-1
– CMA (if needed to justify the sales price)
4. Purchase Contract
When you have accepted an offer and signed a purchase agreement, the ball is now in the lender’s court. Your listing agent presents the purchase contract to the lender. The lender needs something concrete to approve or reject the offer. Your short sale package is also presented to the lender if it hasn’t been sent in already. The package should also include a copy of the listing agreement, the buyer’s proof of ability to purchase such as a pre-approval letter or a copy of an earnest money check.
This is where the waiting starts as buyers can wait a very long time to get a short sale response from the lender. Typically, the lender can take from 10 days to as long as a month to acknowledge receipt of the offer and another month to accept or reject it. And while you can accept backup offers during the time the lender is considering the offer, you can only submit it to the lender if the previous offer has been rejected. Some short sales get approval in two to eight weeks. Others can take 90 to 120 days on average.
When the short sale approval letter has been finally received by the agent and if until then the buyer hasn’t canceled the offer, the sale is a go. The lender should issue a preliminary settlement statement detailing the date of closing and closing costs. You won’t have to pay the selling costs because these are handled by the lender. Yet you will not receive any money from the deal. Attend the closing and sign all the paperwork and make sure that you receive a statement waiving the lender’s right to pursue a deficiency judgment against you.
Short selling your Upstate home is safer than foreclosure. We’d love to sit down with you and discuss your real estate plans. If you are short selling, we can give a value estimate, guide you in the short sale process, and share all the tools that help us sell our client’s homes for more. No one can guarantee your short sale will be accepted by the bank, but as a top Upstate real estate team, we provide our clients with a success rate far above industry averages. We get the job done.
Contact us today! 855-473-9976
or get a FREE HOME VALUATION now