Short Sales - What You Need to Know...But Don't Know to Ask

Short Sales. They are good, they are bad and they can be ugly. But at the end of the day, they can be done. But there is definitely information you want on your side before you start this whole process. And at the end of the day, patience & persistence can pay off.

What you need to know: Short sales or "pre-foreclosure" sales allows a home owner who owes more on their mortgage than the current market will bare, and must sell. Now your reasons for selling will be looked at by the bank, your lender. So be prepared. First steps should look something like this:

1. Download the AZ Attorney Generals' Pre-Foreclosure Work book
http://www.azag.gov/consumer/foreclosure/documents/StateTaskForceWorkbook.pdf

This work book will be extremely helpful in the entirety of the whole process. In addition to resources, there are budget sheets and options if you want to stay in your home vs selling and after the fact, rebuilding your credit.
2. CALL A REALTOR who has expertise in short sales.
3. CALL YOUR LENDER...tell them what is going on, but ask for loss mitigation, not
collections or payments those departments only do one thing...collect payments.
4. CONSULT an Attorney and/or an accountant about the potential ramifications of a
short sale.

What you will need:
1. Ask your lender for a short sale package
2. A letter detailing why you need to do a short sale. For example: did you loose
your job, pay cut, loss of hours, medical, etc. Be detailed on what happened an
when.
3. Your most recent tax returns, bank statements, pay stubs, & utility bills. This
is all needed because when you purchased the house you had to qualify for the
loan. Now you are re-qualifying for the short sale. Sometimes this process is
more detailed than when you purchased.
4. A letter of authorization for your REALTOR to contact the bank on your behalf.
Many times we will need a lot of information to do this for you. This letter is
key!

Get this information together before you try to list your home. Have it ready, be in contact with your bank. Your REALTOR will help you price your home according to what the current market will bare. Be as close to the mark on this, if you are too far below, many banks will push you to the side and not accept your short sale.
So flash forward, you receive an offer on your home. Your REALTOR will help you negotiate the offer. Additionally, a pre-settlement statement will be received from a title company and must be submitted to your lender with all of your short sale package. From there your file will be assigned a negotiator. They will look through the package to make sure everything is there, is complete and then starts the process of qualifying you for the short sale. At the same time your lender is going to get either an appraisal of the property, a broker price opinion or both to make sure the sales price is in line. This is a long process and can take as little as 30 days to 6 months. PATIENCE & PERSISTENCE!
When your lender approves your short sale, there may be terms or conditions that you must agree too. This is where you need to consult an attorney & an accountant - again. MAKE SURE YOU UNDERSTAND! There may be tax consequences, so knowing and understanding is a big deal. If you agree to the terms of your short sale, the escrow with your buyer will proceed.

You can have success in this area. It is not easy, but it can help save you from foreclosure and save some of your credit. Know your options. Get all the information. Start with the Attorney Generals Pre-Foreclosure Guide, it just came out in July and is very helpful.