Short Selling
A short sale is when you are selling a property whose end value isn’t going to pay off the money that is owed on it. That money could be the loan, taxes, or any other fees. As a seller you either have to agree with your lender to either forego the outstanding balance or make your own arrangements to pay of the excess.
This kind of property sale should only really be considered as a last resort. If you cannot raise the money, reconfigure your loan to a more affordable rate, or the FHASecure plan can’t help, then you may have no choice. As with any big decisions it is advisable to seek professional advise before proceeding with anything like this.
To get a short sale approved, your lender must agree to it. The criteria for getting one approved varies by lender and that will have to be discussed between you. To get approval you must demonstrate four things. The first is financial hardship. You have to demonstrate that you cannot continue with the payments, and will need to prove your case with bank and salary statements. The second is deciding the property value. You again, will need to prove that the property is worth less than you owe. You will need to get a realtor to provide you a quotation and a comparative market analysis, which you will have to pay for. The bank may also want a second opinion and send their own evaluator round. You may also have to foot the bill for this.
If your lender agrees to all this, then you must also submit any buyer offer to them to approve. Everyone who has a financial interest in the property must approve the buyer before you can proceed with the sale.
The process of approving a short sale may take a few weeks. Your preparations, and presenting all of the required documentation will speed things up a lot, but there is a lot of stages and approvals in this procedure so you certainly won’t get an instant answer!
Selling short is only something to consider as a last resort, but is still an option if you cannot pay off your loan by traditional means. As has been said before, take professional advise before doing anything drastic, as there may be another way.
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