A property short sale involves selling a home for less than the amount owed on the mortgage. Unlike foreclosures, which are the result of a court-ordered action by the lender, short sales are entered into voluntarily by homeowners. Short sales are complicated, and the outcome of the process can have major legal, credit, and tax implications for the seller. Real estate licensees should understand the basics of a property short sale transaction and have tools at their disposal to assist clients through this difficult time.

Lender approval is required for a short sale. Lenders will review the entire short sale package, including the hardship letter and the narrative that explains why the sale is necessary and desirable. The lender may reject the short sale or approve it with certain conditions. In either case, the lender will determine the net proceeds from the sale and how much of a cash contribution is required by the borrower to close the short sale. Also read https://www.webuyanykindahouse.com/sell-your-house-fast-in-roslindale/

The short sale process can take longer than a normal sale because of the need for lender approval. In addition, there is a greater likelihood that the lender will find another property and decline the seller’s request. As a result, short sales have a lower success rate than regular home sales and require more time to close.

One key to success is to have all documentation in order. Lenders will want to see a

complete marketing package and supporting material that demonstrates the current market conditions, comparable sales in the area, and price trends. You should also be prepared to answer questions about your own marketing efforts and any other information you can provide to help justify the price you’re asking for the property.

The hard work starts after an offer is submitted to the lender. The seller must prepare a hardship letter that clearly states the reasons why he or she cannot afford to continue making payments on the property. It should be persuasive and include corroborating materials such as employment letters, bank statements, and other financial documents. A successful hardship letter can make or break a deal.

If there are multiple liens on the property, all lien holders must agree to the short sale. If any lien holder rejects the sale, the lender can refuse to honor the offer. Often, lenders will pay the first lien holder a small portion of the sale proceeds in order to encourage them to cooperate with the transaction.

Some lenders are using this process to avoid foreclosure, but they may also use it to acquire valuable consumer information. If you encounter any activity that seems suspicious, report it to your broker. A professional experienced in completing short sales can guide you through the process and ensure that your client’s best interests are protected. Ultimately, both the buyer and the seller will be financially responsible for any deficiency that exists after the sale. For this reason, you should never accept payment under the table to negotiate a short sale.