More than 80 percent of distressed homeowners who go into foreclosure have never contacted their lender or a real estate professional for help. That's a staggering number when help and relief are available.
In this blog, part of a multi-part series, we'll discuss the different pit stops and road blocks along the Short Sale path; who the players are, what documents are required, and we'll give a cursory overview of how Short Sales work. We'll explore these concepts in more detail as we apply them to real world situations throughout the series.
An important thing to understand about Short Sales is that the process is anything but "short." The only thing "short" about a Short Sale is the payoff to the lender. Whether you are a buyer or a seller, patience is your friend while the real estate professional negotiates the Short Sale with the lender. Otherwise your hair will gray at an alarming rate.
The first thing the homeowner needs to prepare for is explaining the hardship. Lenders do not care if you simply owe more now than the house is worth; they are looking for a valid hardship. You originally qualified for the mortgage and the lender is looking to see what has changed financially. A decrease in the home's value alone is not qualification for a Short Sale. So what is?
Examples of valid financial hardships are: Loss of Job, Reduced Income, Mandatory Job Relocation, Business Failure, Death of a Spouse or Family Member, Severe Illness, Medical Bills, Divorce or Separation Payment Increase, Mortgage Adjustment, Insurance or Tax Increase, Military Service, Damage to Property, Too Much Debt, Inheritance, and Incarceration.
While not an all-inclusive list, it's a good start. If you're able to prove any of these hardships, the lender will seriously look at your case.
The easiest way to understand the Short Sale process is to think about qualifying for a mortgage. When you apply for a mortgage, the lender reviews your recent bank statements, pay stubs, tax returns, etc. to determine your ability to repay the mortgage.
When you apply for a Short Sale, it's like undoing a mortgage. The lender will want to see the same documentation, along with a hardship letter, to determine your inability to repay the mortgage. If you can do this successfully, the lender will likely approve a Short Sale.
In Anatomy of a Short Sale, Part 2, we'll look at what makes up a Short Sale Package.
Based on The Field Guide to Short Sales. Copyright © 2010 by Tom & Gina Branch.
Tom Branch and Gina Branch, The Branch Team with RE/MAX Dallas Suburbs, service the greater North Dallas suburbs including Dallas, Plano, Allen, McKinney, Frisco, Lewisville, and Carrollton. While Gina concentrates on traditional listings and buyer/tenant representation, Tom specializes in assisting distressed homeowners to avoid foreclosure. Tom and Gina have published two books (Achieving Rock Star Status and The Field Guide to Short Sales) and are available for speaking engagements in the greater Dallas - Fort Worth Metroplex. Subscribe to The Branch Team Blog.
Copyright 2009-2012 - The Branch Team
The Branch Team - Texas Real Estate Broker 547597 | Team Members are Texas Licensed Real Estate Professionals
Tom Branch - National Mortgage Licensing System 341963
Important Notice: The Branch Team with RE/MAX Dallas Suburbs is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental.
