A short sale is an alternative offer allowing the owner to sell property at a lesser amount than the actual value to save the property from being foreclosed. However since not all can avail of it; some steps have to be taken prior to granting of request.
Homeowners who opt to avail of mortgage may sometimes experience difficulties in paying his obligations. This possibility is common especially with the global crisis. However, being delinquent for at least a month can be a ground for foreclosure. To save your property, the lender may provide you with an alternative offer, which is short sale. Below is the brief overview and the process on how to go about it.
What does short sale mean
A short sale in real estate means that the amount at which the property can be sold is very much lower than what the homeowner owes the lender. In case the borrower can no longer continue to pay the mortgage, both parties agree to sell the involved property at a lesser cost than the actual arrear to avoid foreclosure of property. However, this agreement is not always applicable to all lenders while, not all properties qualify for a short sale. Therefore, you need to consult legal assistance to determine whether or not you can avail of this set up.
How to avail short sale
Since not all qualify for this agreement, some actions need to be taken in order to proceed with the process. This is a long process, which sometimes take between four to six months due to numerous steps of evaluation. Here are the following steps to go through such as:
Inform the lender
The very first step to do is to inform the lender of your intention to avail of the short sale agreement. This is essential because they still have to evaluate your status and will require you to submit supporting documents as proof of your incapacity to pay.
Provide authorization letter
To work out your concern, the lender must be able to communicate with your real estate agent about your property. However, you need to authorize the lender before disclosing any pertinent information such as name of owner, property address, loan reference number, name of real estate agent, and the likes.
Prepare a closing statement
This is a document that shows the following: date, selling price, unpaid dues, and agent's commissions - all prepared by either an agent or a lawyer.
Letter of difficulty
A formal way to inform the lender is to write a letter stating the reasons for not being able to pay your obligations. It is acceptable if you were terminated from employment or hit by a calamity as long as they are not mere fabrications what is real estate.
Submit proof of income
As a proof of hardship, submit an income statement disclosing your worth. Lenders want to know if you have savings or other properties that have substantial value. To avoid such circumstances, you need to have proper planning and budget allocation before you proceed with acquisition of property.
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