Short Sale Tips for Sellers

The time may have come when you need to sell your home, even though it is a down market. Maybe, you have lost your job or experienced some other life changing event that has greatly impacted your ability to maintain your mortgage payments. The challenge, faced by many homeowners in this situation, is the mortgage owed is greater than the selling price (value) of the home. In this case, a homeowner may be facing a short sale.

Short sales exist for those situations where the net proceeds from the sale of a home will not cover the mortgage and closing costs to sell the home. In these cases, the seller does not have any additional funds available to cover the deficit, such as savings, stocks and other investments, or other assets. Within a short sale, the seller works with the lender unlike a foreclosure where the lender takes the title of the home through a lengthy legal process.

So, where would a seller start if they felt they fell into the categories described above?

1. Consider a Loan Modification: If you are considering a short sale because of a financial difficulty that may be temporary and you really want to stay in your home, you should contact your mortgage lender to discuss a loan modification. Through a loan modification, several options may be available:

  • Refinancing the home with a lesser interest rate
  • Manipulating the payment plan to allow the seller to ‘catch up’ on payments
  • Provide a forbearance period if the situation is temporary
2. Hire a Qualified Short Sale Agent: There are specific steps that must be followed in a organized, particular manner in order to ensure the best possible result when dealing with a mortgage lender on a short sale transaction. You should seek an Agent with a standardized system with proven success. The ability of an Agent to present a system that describes the steps of a short sale from the first meeting until closing is crucial in determining your best representation options. It is recommended that a homeowner interview at least three real estate agents before deciding on one to represent them. The Agent you choose should, at the very least, offer the following:
  • Work with you through a Short Sale Qualification Interview to determine where you stand and the best next steps
  • Have a clear understanding of what is required in a short sale package and help you to collect and prepare the package
  • Have professional relationships established with real estate attorneys and title companies who are experienced in short sale transactions
  • Have a clear understanding on how to get your property sold via an established marketing plan. Furthermore, how to best price your home for a quick sale that will, most likely, be approved by the mortgage lender
  • Have an established system to deal with the lender’s loss mitigator
Taking these two initial steps will help you to become better informed and able to understand exactly what is happening and how to evaluate any ramifications to a short sale transaction.
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About Toni Hedstrom

I am one half of Hedstrom & Stamm Home Solutions, a dynamic real estate team with emphasis on home marketing utilizing our exclusive Home Ready Program.