Do I Need an Attorney to Try a Short Sale?
In real estate, a short sale is when your lender agrees to allow you to sell your property for less than the balance on your outstanding mortgage. This is an option if you are facing foreclosure and cannot sell your home for its appraised value or for the balance remaining on your mortgage. It is not necessary for a borrower to hire a lawyer to complete a short sale.
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General Qualifications
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Not all properties qualify for a short sale and not all lenders allow them. Contact your lender to see if your home qualifies and to obtain the lender's specific short sale qualifications. Typically, to qualify for a short sale you must currently be in default on your mortgage loan. If you are facing imminent default due to circumstances such as bankruptcy, job loss or significant drop in income, your lender may allow you to begin the short sale process. Lenders may also require that your home is currently worth less than your outstanding mortgage balance.
Documentation
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Once your lender approves the short sale, it will request that you provide financial documentation to continue the short sale process. Commonly requested documents include a financial hardship affidavit, two years of tax returns, two years of W2 or 1099 forms, copies of current bank statements and your most recent paycheck stubs. Your lender will also require you to provide a letter of authorization signed by you and your real estate agent. This letter gives your real estate agent permission to speak with your lender regarding the short sale of your home.
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Property Sale
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Once a buyer makes an offer on your home, it is at the discretion of the lender to accept or reject the offer. If your lender accepts the offer, it is agreeing to take less than what you owe on your mortgage. Once the sale is complete, the proceeds from the sale go toward paying realtor fees and your outstanding mortgage loan balance. Once this process is complete, you sign over the deed to your home and no longer own the property.
No Sale
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If your home does not sell, your lender may require you to decrease the listing price of your home in an effort to help it sell. Your lender may also offer you the option of completing a deed-in-lieu of foreclosure. A deed-in-lieu of foreclosure is a process by which you sign over the property deed to your lender. Your lender will require that the property is in good condition to complete a deed-in-lieu of foreclosure. Once this process is complete, your lender owns the property. Deed-in-lieu procedures vary by lender.
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