How To Prepare For A Short Sale Transaction

Many homeowners who have been undergoing difficulty paying off their outstanding loans resort to an option known in real estate as a short sale. A short sale can be qualified as an alternative to a foreclosure mainly because it provides the troubled homeowner a way to avoid a foreclosure situation that can prove to be damaging to his credit profile.

In a short sale, the lender practically agrees to take a payment less than what is still owed on the mortgage. The homeowner is permitted to sell the property or his house at a price less than his actual outstanding obligation and to apply the proceeds to settle his loan. If your home is in a pre-foreclosure stage and you want to enter into a short sale, you should be able to get your lender to agree to it. Here are some of the important things that you need to know when doing a short sale.

Determine the Value of Your Property. Before you start advertising or looking for buyers, you need to verify the value of your house. This is usually accomplished by doing a competitive market analysis or CMA. A broker can help you come up with a reasonable estimate of its current market value, but if you have some basic know-how on estimating real estate values, then you can do the analysis yourself.

Add Up All Selling Costs. A short sale will entail some amount of expenses and you have to determine how much these would be. See how much money you will have to spend on advertising and listing your property, broker’s fees, and closing costs. If you are soliciting the help of an attorney, you will also have to add the legal fees that you have to pay for the services.

Do The Numbers. Remember that the object of a short sale is to settle your loan without going through a foreclosure. You need to know the precise amount that you still owe to your lender and all other loans that you may have against your property. Expect to get a negative balance when you subtract the amount of your outstanding loan from the proceeds of your projected sale.

Cover All Legal Aspects. Of course, a short sale is not exempted from some legal requirements like tax payments and compliance with existing laws. The best way to ensure that your transaction is accord with the law is to get help from the professionals themselves. Consider getting a certified accountant or a lawyer to handle all the legal issues that you might encounter in the process.

Talk To Your Lender. Before making any offer to any prospective buyer, you need to talk to your lender and get the bank to agree to your short sale proposal. Find someone in the bank who has the proper authority to deal with these matters. Most likely, the bank will review your loan record in order to evaluate whether to allow you to sell your property or not. It will not hurt to ask your lender if there is any possibility of them reducing your outstanding loan.

Remember that the lender has to approve a short sale. If you want to ensure its success, then it is important to get the advice of professional and qualified people before pursuing a short sale.


John Evan Miller is dedicated to providing the best foreclosure short sale information on the web. Make your way to ForeclosureDeals.com for any questions you may have in regards to foreclosure short sale.