A short sale seller and a real estate agent should work closely together. The seller must understand that the lender is not obligated to accept a short sale offer. There are certain steps that need to be followed to qualify the property for a release. Mortgage holders understand, especially today with falling home values and disturbing employment numbers, the need to consider short sales and the ensuing losses.
Experienced real estate agents know how to build a case for the short sale. However, at some point, there are legal, credit and tax considerations that accompany every short sale. Sellers should discuss the short sale repercussions with an accountant and/or attorney.
The seller needs to know a reasonable selling price for the subject short sale. The fact is that many of the residences in today’s market are under water, meaning that the mortgage amount exceeds the property value. Lenders need to be able to justify short sales and it is up to the seller and the real estate agent to build a strong case supporting the short sale application.
The following documents should be part of the short sale application.
· Letter of Authorization – this letter will authorize the agent to discuss the possibility of a short sale with the lender. The letter should contain the address of the subject property, the name of the seller and the loan number. Include the agent’s name, address and contact information.
· Preliminary Net Sheet – This is a sheet reflecting the proposed selling price and all closing costs as well as secured loan amounts. Include outstanding loan payments and late fees.
· Hardship letter – A statement of facts conveying the facts surrounding the seller’s hardship. Pour it on.
· Proof of Income and Assets – a true representation of the seller’s financial condition. Be truthful and provide as much substantive material as possible.
· Copies of Bank Statement – Include recent copies of every banking and securities account.
· Comparative Market Analysis – Have the real estate agent show the property’s true value by including details of recent transactions of comparable properties. This is a critical component of the process. Include pending sales, current active listings and closings for the past six months.
The lender needs to know that the property is not worth the amount of the mortgage and that over time, the condition could worsen. The real estate agent should be able to build a strong case.