Contributor: John Evan Miller
John Evan Miller
However, short sales can be rather tricky. Here are some helpful tips to ensure your short sale experience is a success.
Tip #1: The Hardship Letter
Lenders only consider short sales when the homeowner is delinquent upon payments and is likely to undergo foreclosure. The homeowner must submit a hardship letter that outlines why he or she will no longer be able to pay the mortgage payments. At this time, the lender then decides that a short sale may cut their losses as opposed to moving toward foreclosure and being faced with up to double the loss and therefore approve the short sale.
As a seller, the hardship letter must be proved and based on fact and indicate that the reason you are getting out from under your mortgage payment is due to hardship and not merely due to a desire to rid yourself of a home that is declining in property value. Therefore, the hardship letter should be exceptional and presents your case accurately.
Although the hardship letter is important for sellers to obtain permission to do a short sale on the property, it is also essential for those seeking to purchase the property. It is best to ensure that the property is being sold due to an inability to pay the mortgage payments due to hardship (job loss, illness, etc.) as opposed to a deflation of property value. As a buyer, you definitely do not want to pay a significant price for a home you think you are getting a good deal on but in reality is drastically declining in value.
Tip #2: The Waiting Game
When it comes to purchasing or selling a short sale property, it is essential to understand that the short sale process takes time; therefore, do not expect an immediate sale. It is highly unlikely that the process will be short and painless, especially if more than one lender is involved. As a buyer, just realize that despite the wait, you will get a bargain on your new home. As a seller, remember that waiting is a lot better than facing foreclosure.
Tip #3: The Property
As a buyer, it is important that you understand that the property you are purchasing is more than likely being sold “as is.” Therefore, requesting repairs will more than likely waste your time. Instead, come to the table prepared to give a reasonable offer that obtains all essential elements, including a financial statement if at all possible. Having this documentation ready can help speed along the process.
Tip #4: The Reasonable Offer
Along with ensuring that you have proper documentation if you are the buyers, it is just as important to ensure that your offer is reasonable. If you present an offer that is ridiculously low, then you may not even receive a response to your offer. One of the best ways to ensure you are making a reasonable offer is to have an agent provide you with a list of similar homes in the area that have sold recently and the prices of these properties.
Tip #5: The Closing Date
When it comes to a short sale, the buyer and seller must realize that the closing date is NOT flexible. Once the date is set, then both parties need to ensure that they are completely prepared for closing on the date that has been agreed upon.
In the end, short sales can be successful and help both the buyer and the seller. These 5 tips can help ensure the short sale process is as smooth as possible.
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