What does a short sale mean?
A short sale is a kind of real estate sale in which the funds generated from the sale are used to pay off the home loan balance. In the times of financial crisis, it becomes unusually difficult to pay back the home mortgage loan. Under such trying conditions, holding a short sale is the most feasible option. On the one hand, it helps the lender to recover the loan balance, and on the other hand, it allows the homeowner to handle the money deficiency deftly.
Is short sale beneficial?
From the homeowner’s perspective, short sale is an ideal way to avert foreclosure. While the former remains on the credit report for no more than 7 years, the effect of the latter is quite severe and longer-lasting. Furthermore, one or three years after conducting the sale, the property owner becomes eligible for yet another home loan; this is not possible with foreclosure. The short sale doesn’t provide any kind of monetary benefit to the owner, but it plays an important role to lessen his financial burden.
From the mortgage lender’s point of view, short sale is an idyllic way to retrieve the remaining loan amount. Although the lender has to give a discount on the home loan balance, but the operating costs are less, and hence, the overall financial loss is also less. Moreover, the lender has the power to accept or turn down the sale. Also only he can decide whether any discount should be given, and if it has to be given then how much.
How to prepare for a short sale?
• The first thing that you need to do is to discuss with your legal advisor the pros and cons of organizing a short sale.
• If you feel that such a sale would help you to alleviate your financial problems, then find a competent real estate agent who has first-hand experience in short sale.
• With the help of a letter, authorize your mortgage lender to discuss your home loan problem with interested individuals.
• Ask your real estate agent or attorney to prepare a preliminary net statement. In this statement, all the things related to the sale like unpaid loan balance, overdue installments, late fees, commissions, short-sale price, operating costs, and the like would be enlisted. By studying the statement, you can easily decide whether to proceed with the sale or not.
• After you have taken a decision, write a hardship letter to the lender. Put forth your financial problem honestly, and provide the supporting evidences.
• Don’t forget to attach the bank documents that explicitly show that you have withdrawn large amounts of money, several times in the recent past.
• If the fall in the real estate prices is the reason for holding the short sale, then attach the comparative analysis report.
• If you find an appropriate buyer, and both of you agree to upon the price of the property and so forth, then send the copy of the purchase agreement and listing agreement to the lender. He will carefully examine the documents and thereafter decide whether to approve or disapprove the sale. If the short sale is approved, then your monetary deficiency will immediately come to an end.
For some of the best real estate properties, take a look at
Short Sale Homes in West Phoenix Valley,
Paradise Valley AZ Short Sale Realty and
Short Sale Houses in Glendale AZ.
