- A decision is made to do a short sale, which means a property is being sold for less than the amount owed to the bank. The seller also loses money in the process and there may be tax implications for the seller, but this avoids a foreclosure.
- The seller discusses the short sale option with the lender and the lender sets forth their requirement for allowing a short sale. They may dictate the house is on the market first for a certain period of time, a minimum price, and the process for completing a short sale. The homeowner will have to provide a hardship letter that will make the bank empathetic, proof of income and assets, and copies of bank statements. Hopefully, this will be enough information to justify the need for a short sale.
- The buyer will make an offer on the house that the lender will review. The seller must have the purchase agreement approved by the lender. The lender will take into account the amount of money left on the loan, closing costs and expenses, and they will also run a comparative market analysis to determine if the real-estate market makes the short sale necessary. If the offer is reasonable, they will accept it.
- The lender will scrutinize the offer and the market value of the house to make sure they are getting a fair price for the house to recoup as much of their costs as possible. The buyer will not have as much leeway as they would have if they were buying a house for the full price. For example, they have to purchase the house "as-is" with no seller warranties.
- The prospective buyer conducts an inspection of the home. They check for pest and termite infestation, roof damage, sewers, wasted disposal systems, fireplace, chimney, heat and air systems, and for other possible issues in the home. The offer letter would have been contingent on such an inspection.
- If all goes well, there is a standard real estate closing on the short sale except for the fact that the lawyer of the lender may be present and there may be some extra documentation. In many cases, the lender will report the sale favorably to the credit reporting agencies.
Comments
kingtmac said
on 2/18/2009 I have a short sale property in Park slope, Brooklyn new york. On 20th street bet 6th and 7th ave. 3br 2bth condo must go. All offerings considered. Tax abatement for 25yrs. contact grolex30@aol.com or call 718-781-6113/ 718-207-8383. Private park roof deck luxury apartment.