For many home-buyers out there you may already be aware of what the short sale process can be like. Certainly if you are a home owner in a difficult situation it is a good option to avoid foreclosure. But many out there may not be aware of the many challenges to selling or buying a short sale property. This is not for the faint-of-heart.
In a very oxymoronic manner, banks won’t even speak with the homeowner about a short sale unless they are 3 months behind in payments. Once those discussions start there are a few steps the homeowner is required to fulfill. It would be beneficial to have had your home on the market already but if you haven’t get listed with a Realtor that has worked short sales from the listing side.
All of the seller’s financials need to be pulled together, such as:
1. A Hardship Letter that details why they are in the situation (loss of job, death, etc.)
2. A sellers net sheet showing expected sales price, costs of sale, payoffs, etc.
3. Bank statements
4. Proof of income and assets
5. Comparative Market Analysis detailing what your agent thinks the home will sell for
6. A copy of the listing agreement
7. A request that they release information to an attorney or a realtor that may be negotiating with the bank on their behalf.
Now would be the time to reduce the home to a price that may be less than what is owed but a price that will start to garner offers.
At some point the bank will identify a negotiator within their organization. The negotiator may be handling several hundred files across the country – depending on how big the bank is – so expect that they will be difficult to get in touch with and slow to respond. From this point, prior to offers, the process could easily be another 3 to 6 months.
The real challenging part comes into play once offers are received and you begin submitting those to the bank. I’ll discuss this in Part 2
Tags: Short Sale