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If you are wondering if a short sale of property is right for you, you should know that it is a highly individualized and personal issue. However, there are some circumstances and factors that commonly apply to sellers of short sale properties.
If you are behind on your mortgage payment and unable to keep up with all of your monthly obligations due to a sudden change in monthly household income, loss of job, job transfer, health problems, or divorce, a short sale might be a good fit for you. A short sale allows you to sell your property to your lender for less than you owe on the loan, but if approved, in most cases the sale satisfies the entire debt.
Also, if you are not yet behind on your monthly mortgage payments, but you know that circumstances will prevent you from staying current in the near future, a short sale might be able to solve your situation. You should of course consider the effects a short sale may have on your credit score in deciding whether a short sale is a good fit for you and your property.
The first step in a short sale generally is to contact your lender and determine what is required to initiate the process. You may also want to consult with and/or hire a Realtor, real estate lawyer, or other industry professional to guide you through the process. If you work with a Real Estate agent, you will be required to submit a Letter of Authorization to your lender to give the company permission to discuss your private financial matters with your agent.
Once you have been in contact with your lender, you will be given instructions for how to proceed with requesting a short sale. You likely will be asked to provide documentation, such as a “Hardship Letter” and current bank and financial statements, to determine whether you and your property qualify for a short sale. It can take a few weeks or a few months to get an answer from your lender about whether you qualify and complete the transaction.
You are shopping for home and there it is - a house in your target area at a steep discount! If it's a short sale, there may be a few more hoops to jump through. Indeed, buying a short sale home after it's been sold back to a lender can be a great deal. But it also comes with potential obstacles and problems.
Banks and other lenders do not like managing properties, so they often are motivated to sell properties they acquired from borrowers in short sales. That can mean as a buyer, you can get a good price on a short sale property.
However, short sale properties generally have maintenance and repair issues, since the former owners didn’t have enough money to keep up with the payments or maintain the property. When considering whether to buy a short sale home from a bank or other lender, it is important to have an independent appraisal of the property done to determine whether the home is a sound investment.
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified real estate lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local real estate attorney to discuss your specific legal situation.