Short Sale Nitti Gritty
Short Sale Nitti Gritty
Short sales are a great option for those who are finding themselves on the brinks of foreclosure, but our LDS agents want you to see some of the facts about short sales, and give you an opportunity to weigh your options. Here are some important points to know about short sales and some things you can do in preparing your home for a short sale.
First, if you are questioning about a short sale, contact a real estate lawyer and an accountant. Why is this? Well, for starters, since a short sale forgives a homeowner of some debt, you will have to determine if that debt will affect your next year’s taxes. It could be considered debt forgiveness, and the tax ramifications could be quite large. A lawyer can determine if you qualify for a deficiency claim. Also there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid.
When you have determined that you can proceed with the short sale process, call the lender you have chosen, and ask for a supervisor name and the person capable of handling the short sale transaction directly! Also, submit a letter of authorization including but not limited to: Your name, address, your agents name and contract information, the date, and the new loan reference number given from your lender.
Next, you will need a preliminary net sheet, also known as an estimated fee statement. Normally it will show the sales price of the home, unpaid loan balances, outstanding payments and late fees. Your closing agent or lawyer should be able to prepare this form for you.
Also, be sure to write your hardship letter. This letter is a formal written statement about how you got into financial ruin, and please be precise, but also do not leave important details out. The harder your financial bind is, the more likely you are to get the assistance you need.
As far as your proof of monies, you will need bank statements, and proof of all income (including paystubs) and assets(car, stock markets, money market account, savings accounts, etc, etc.). Be honest about your income because banks will need to know if the debt being forgiven is really negotiable.
Your LDS real estate agent will also prepare what is called a CMA form (Comparative Market Analysis). Your home may be worth less than what you bought it for, and in turn could mean you are upside down in your home, and it lets a bank know the unlikely chance you will ever pay off that loan. It is a statement showing comparatives that have sold in your area, pending sales, and home that are for sale and their asking prices.
Lastly, when you reach an agreement to sell with a buyer, the lender will want a copy of the offer from the buyer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such termite inspections.
To conclude, if all of these items on the list go as planned, you will be approved by the lender, and as a part of the negotiation, you may want to ask them to not let this affect your credit adversely. However, not all banks are going to agree with that wish, and your credit may still be adversely affected. Credit statuses are not always negotiable.
If you need more advice or a little more insight, CTRAgents.com is here with you, and we will give our honest opinions. Contact one of our LDS agents today for a consultation!