What is a Short Sale?

What is a Short Sale?

Into each of our lives comes a little rain from time to time. Whether it’s losing a job, ending a marriage or illness, difficult circumstances are challenging, both personally and financially. When we encounter life’s difficulties, items you’ve worked hard to achieve, like a home, become difficult to hold on to.

If you are faced with the possibility of losing your home, it’s important to know that you have options. The ideal option would be to get a loan modification from the bank. Unfortunately, this isn’t always possible as and other options such as a short sale must be explored.

In a short sale, a piece of property is sold for less than the amount that a borrower owes on the property. It’s an agreement between the borrower and the lender that selling the property and taking a lost on it is better than having a borrower default on the loan. It is often determined that a short sale is a preferable option for both parties because it helps the borrower avoid severely damaging their credit by foreclosing on their home and is often cheaper for lenders.

To obtain a short sale, you must submit information to your lender that indicates that you are experiencing a financial hardship and that selling your property for less than what you owe is the most advantageous route to take for both parties. Your lender will consider unemployment, divorce and medical emergencies as viable hardships. Also, if the value of the houses in your area has declined, you may want to seek a short sale as well.

The process of obtaining a short sale starts with gathering financial information to prove that you are experiencing a financial hardship. The lender will want to see items such as bank statements, pay stubs, debt payments, medical bills, or proof that you lost your job, among other items. If the housing market has declined in your area, the lender will want to see a competitive market analysis.

Next you must write a formal hardship letter explaining your current situation and why you will have difficulty making mortgage loan payments going forward. This letter and your financial information should paint a clear picture of why a short sale is the best option for you and your lender. To certain degree, it’s important to sell the lender on the idea via facts and your personal story.

It’s advisable to contact a licensed real estate agent to market your property as a short sale. Keep in mind, in order for a short sale to occur, a buyer has to purchase the home. Unless that happens, you will not qualify for a short sale. It’s also possible that your lender will reject the buyer’s offer, which will also prevent a short sale from taking place.

It’s important to note that short sales can adversely affect your credit score. While it’s typically not as damaging as a foreclosure, it is noted on your credit report that a short sale of your property has taken place. Also, if you haven’t been making payments prior to your short sale, your credit score will be affected.

There are a number of procedural details to consider when pursuing a short sale, an experienced short sale attorney can help. Contact the attorneys at McIntyre Thanasides Bringgold Elliott Grimaldi Guito & Matthews, P.A.. We can discuss your case with you help you discover a viable solution. Contact us today at 844-511-4800.