The Mortgage Short Sale Process
A short sale may be a better option than a foreclosure if you find yourself behind on your mortgage, unable to make the payments, and you owe more on your home than it will sell for. Mortgage companies prefer a short sale because they usually lose less money then if they were to foreclose and sell the home. The process works well for homeowners as well, depending on how they handle the short sale process.
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Assembling Information
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The lender will probably want some documentation when you ask them to do a short sale. You'll need to assemble your wage statements for the last two months, as well as your last two years' tax returns. You can document a job loss by providing copies of unemployment benefits checks or any letters notifying you of layoff. You'll also need to gather any additional documentation about financial trouble you are having, such as copies of delinquent utility bills. Letters from a doctor or health care bills documenting a serious illness also are useful. You'll want to put together any other information describing your situation, and why it is in the bank's best interest to do a short sale before you proceed.
Contacting a Realtor
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You should contact an aggressive Realtor with experience in short sales to help you through the process. She will have worked with banks in the past to get them the information they need to build a good case for a short sale. She will be familiar with coaching buyers through the different process of short sale buying. Your Realtor will do a complete market analysis showing comparable properties and what they have sold for to give you an idea of where you will stand after the home is sold. You also will have to sign a listing agreement with your Realtor to allow her to try to sell your home.
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Contacting Your Mortgage Company
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You can call your mortgage company directly and ask for their short sale department. They will begin the process of a short sale by taking your information on an application and collecting documents from you supporting the information. This is a good time to determine how the bank will handle the remaining amount you owe on the loan after the house is sold. Ideally, you want a short sale without recourse, which means that the bank will take the proceeds from the sale as settlement in full for the debt, and they cannot pursue you for any deficiency balance.
Completing the Sale
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Your Realtor will market your home and try to get offers from potential buyers. The Realtor will present these offers to your mortgage company because in a short sale, they have the final decision. An experienced agent may continue to demonstrate to the bank that you are in financial trouble and foreclosure is probable if they do not accept the offer. This process takes time. If the bank accepts the buyer's offer, the sale moves forward like a regular purchase. You should make sure that any documents you sign stipulate what happens to the deficiency balance, and that the terms of the sale are what you have agreed to.
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