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Handyman Special located in the village of Millbrook.

Short sale real estate references selling property for less than the balance owed on the mortgage loan. This type of transaction is occasionally offered to borrowers who have become delinquent on their home loan and can no longer afford mortgage payments. In order to avoid the expense associated with foreclosure, banks allow borrowers to sell their house at a reduced price.

Entering into short sale real estate contracts is a lengthy process. Oftentimes, borrowers enlist assistance from a real estate lawyer, realty agent, or short sale specialist. However, borrowers must obtain approval from their lender before listing their home as a short sale property.

Not all banks engage in short selling. Those that do require borrowers to prove they are financially insolvent and unable to fulfill their financial obligation. Short sales are generally reserved for borrowers who do not possess home equity and owe more than their home is worth.

In some instances, banks will grant short sale approval to borrowers who possess home equity and are current on loan payments. Borrowers facing financial challenges due to the death of a spouse, divorce or terminal illness might qualify for real estate short sale.

The first step involves contacting the bank’s loss mitigation department. Loss mitigators usually attempt to qualify borrowers for loan modifications to help them remain in their home. If short selling is an option, borrowers must submit financial and real estate documents to their assigned loss mitigator.

Although short sale protocol varies by lender, most require the same financial documents. Short sale packets consist of legal forms, financial records and a letter of hardship. These documents can be your ticket to financial freedom.

Take time to review the information, fill out every form, double-check everything twice, have a real estate attorney review the documents, and make certain to return the packet on time. Do not lie or exaggerate information. Providing false financial information in a real estate transaction is a federal offense which carries a penalty of jail time and expensive fines.

The short sale hardship letter could very well be the most important letter you will ever write. Hardship letters give borrowers the opportunity to explain circumstances that caused them to become delinquent on their home mortgage loan.

Letters of hardship should be written in chronological order, outlining events that caused financial problems. It is important to list any action taken to overcome financial challenges. If you discontinued cable TV and cut up credit cards, state these facts in the hardship letter.

Once short sale approval is obtained, borrowers are required to sell their property within a specified timeframe. Most lenders require borrowers to have a prequalified buyer in place before authorizing a short sale transaction. Others grant borrowers’ time to list their property through a realtor. If the property is not sold by the deadline, lenders commence with foreclosure action.

One lesser known option for selling foreclosure short sale real estate is to seek out private investors. Many real estate investors are familiar with short selling and can assist throughout the process.

Before signing short sale contracts, be certain to inquire which type of short sale agreement is offered. Some mortgage lenders hold borrowers responsible for the deficiency amount of the sale price and loan balance. If borrowers are unable to pay the amount in full, lenders obtain a court authorized judgment which remains on credit reports until restitution is paid in full.

Other banks accept the sale price as payment in full and do not hold borrowers responsible for the deficiency. This is referred to as Payment in Full without Pursuit of Deficiency Judgment. Obviously, this is the preferred short sale real estate option.

I offered the exact asking price listed. Hoever, what are the chances of the bank accepting this offer? Are my chances higher if the home is already empty? Please let me know thanks!

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A short sale takes place when the value of the property declines to be lesser than the remaining value of the mortgage. The homeowner decides to sell his property because he can no longer keep up with the monthly payments. In this case, the approval of the lender has to be approved. This is necessary because he has to agree to receive a discounted payment of the mortgage loan. This makes it difficult because the lender often rejects the proposal of the seller.

This is why you have to know how to present a good short sale package. It should convince the lender to approve the proposal. First, you have to understand that the lender wants to minimize the loss, so make sure that you have a decent offer for the property. Make sure you have all the requirements as well.

How to qualify

There are various requirements needed to qualify for a short sale. First, there should be a decline in the property value. This can happen if there is decline in property prices in your area. This may also occur if you neglect your property. Aside from the price, the lender will also check your mortgage. It should be near default or in default. This can be a result of a hard time that you or your family is facing.

Another important requirement is the hardship letter. This should explain the hard time you are experiencing which caused you to miss your payments. Not all hardships are acceptable for the lender. You cannot qualify for a short sale if you are unhappy with the current home you are in or that you want to relocate. Some of the acceptable incidences are unemployment, death in the family, divorce and health expenses.

The lender will also require your financial statement. The lender will check if you have other assets. They do this because as much as possible, they want to avoid the short sale. They do not want to resort to this because of the significant loss they will be incurring. Additionally, there are sellers who are doing this to avoid their responsibilities. Some just want to get an approval so that they can move to a more beautiful home.

If you want to apply for a short sale, remember to be patient as this can take longer. You might even need to reapply for it.

For the buyers

If you are a buyer, purchasing a short sale is a good deal. It is not only cheap but it also shows a lot of promise. However, you need to conduct a research before you make a purchase. It is also essential that you know how much the remaining balance of the mortgage is. This will give you an idea of how much to offer the seller. Finally, if you are going to hire an agent, see to it that he is experienced with short sales to be able to represent you properly.

A short sale property is a good investment. However, you have to be careful when making the purchase. If the lender rejects the first proposal, you need to be ready to increase your offer.

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Should you sign it or not?

A short sale addendum is something that many of you have not heard about, so it may come as a shock to you that it exists.  When we think of a short sale, we think in terms of something that is final and has already been decided.  However, they do exist, but they aren’t in all states and even if they are the question could become whether or not they are frequently used.

A short sale is contingent upon the lender’s approval of the agreement to except less than the balance owed on the mortgage loan, so the short sale addendum will clarify this in paragraph A.  This short sale addendum will also set forth the timeframe that they will wait for the lender’s approval, and you’ll see a blank line for this.  There isn’t a way to gauge an exact date that the lender would give the approval, so this is why the blank line is there.

Short sale approvals, can generally take anywhere from one to four months, and it really just depends.  The lender may ask for the seller to make a contribution, and if this is the case, then the seller isn’t obligation to sign the short sale addendum. So, beware! You should certainly never do something that you aren’t comfortable with.

The second portion of this short sale addendum appears in paragraph B, which gives two options regarding the buyer’s earnest money.  You can either opt to release the earnest money deposit to upon the seller’s acceptance, or you can request to hold it until there is a short sale approval.  This is usually suggested only because with a short sale, you can’t guarantee the time frame. Again, you should never do something that you aren’t comfortable with. However, without the release of the earnest money deposit, it might make it too easy for the buyer to walk away during the process.  So, this is a tough call.

In addition, the short sale addendum also gives options concerning getting some other necessary things taken care of.  The inspection and any other contingencies can begin upon acceptance of an offer, or they can begin upon the short sale approval.  The part that gives much uncertainty is paragraph C, which basically states that there is no guarantee that the bank is going to approve the short sale.

The best thing to do when you aren’t sure is to get the correct professional involved.  You need a Certified Distressed Property Expert to help guide you through the process.  For more information on whom you can trust, and what you need to get this done, please visit, www.inlandempireshortsaleresource.com. Help is only one click away.

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