Step-by-Step Short Sale Instructions
If you can no longer afford your mortgage payments and have to give up your home, your lender may agree to a short sale. In a short sale, you sell your home and give the proceeds to your lender to remove its lien on your property, even if the sale price doesn't cover your outstanding amount.
Other People Are Reading
-
Consultation
-
Consult an attorney to get his opinion on the suitability of a short sale for your situation. Your attorney can tell you if you would benefit more from other alternatives, such as letting your mortgage lender conduct a foreclosure or declare bankruptcy. Also, get advice from a tax expert to find out about any possible tax repercussions. Depending on your particular case, the IRS may exert income tax on the loan amount that your lender forgives.
Negotiations
-
To get your lender to agree to a short sale, you need to contact your lender as soon as you know you can't afford your mortgage payments. You may have to provide proof of your financial difficulties, such as medical bills, divorce documents and bank statements. Even after a short sale, your lender may be able to come after you for any portion of your debt that the property sale doesn't cover. To prevent this, get your lender to put down in writing that you don't have to make any more payments after the short sale.
-
Marketing
-
To put your property on the market and maximize your selling potential, you may need to hire a real estate agent. You may face difficulties finding a real estate agent, because real estate agents usually take low commissions on short sales. A short sale also often takes longer to close once you accept a buyer's offer. The smaller commission means that your lender will be able to get a bigger portion of the sale proceeds.
Closing
-
After some time on the market, you may get an offer on your property. Before you can walk away from your property, you need to get your lender to approve the buyer's offer. If your lender approves of the sale price and conditions, you can complete the paperwork and say goodbye to your debt. If you can't find a buyer, you may have to get your lender to accept a deed in lieu of foreclosure, which is when you give up your property title and your lender agrees to not foreclose.
-
References
- Photo Credit David Sacks/Lifesize/Getty Images
