Short sales are gaining tremendous popularity these days. Many of you who cannot find a good buyer for your property would be considering short sales. What you do not know is that there are certain requirements which must be met in order for the short sale to be qualified. Moreover, if the short sale does not get approved, you might have to go through quite a few problems which you never asked for.
A short sale is basically the process when a lender accepts money less than the total amount due.
The Process
A short sale process consists of the following basic steps:
- You will have to sign a listing agreement with a short sales expert so that he can put your property on public listings.
- The short sales expert will search for a buyer who agrees to pay less than the mortgage amount due.
- You and your lender agree to the buyer’s offer.
- When the buyer makes the payment, the lender will release the lien. The process then ends.
Qualifications
You must qualify for the four factors given below for the short sales process to be conducted forwards. Qualifying on even three of these will still reject the short sale.
- The market value of your property should have dropped. The total worth of your home must be less than the leftover balance amount which you have to give to the lender. A payment penalty may also be added to the unpaid amount.
- The status of your mortgage must be approaching or in default. Many factors can contribute to a default so quite a few lenders want to avoid future problems by agreeing to a short sale process.
- You are going through financially tough times and cannot pay the loan for any number of reasons. Examples are unemployment, death of a loved one, medical emergency and bankruptcy. You will also be asked to submit a hardship letter that states why you cannot make further monthly payments.
- You should have no assets left. If you have any remaining, the lender will most likely disapprove the short sale. You will have to share copies of financial statements and tax returns.
- You must find a buyer that makes an offer less than the mortgage amount do, and the lender must accept it. Only then will the short sale be approved.
Consequences
There are a certain consequences of short sale that might not be important, but exist all the same.
- Decreased credit rating
- Tax payments
Stephen R. wrote this article for those savy Las Vegas Short Sale experts at Rothwell Gornt. Check out their Short Sale Blog for more fun facts.