Understanding the Short Sale Process

Before you consider a Short Sale be sure to contact your lender and any other agency that may be able to help you. Beware of anyone who approaches you to “solve your problems,” or charges you any fees. Use only a licensed realtor who gets paid only when the property is sold. There may be important tax considerations. Be sure to contact a qualified tax accountant to understand how they may affect you. As soon as you get a Foreclosure Notice... If you have missed any mortgage payments the lender will contact you to warn you of a possibility of foreclosure. You will usually be given the option catch up with your payments or perhaps to work out some kind of payment schedule. This is called the REINSTATEMENT PERIOD. If you are unable to do this you will get a notice in writing, usually from an attorney acting on the lenders behalf, warning of the foreclosure and the impending SHERIFF’S SALE.

The SHERIFF’S SALE is scheduled and there is a public auction for the property conducted at the Sheriff’s office or county courthouse. Usually it is the bank that wins the bid for the property. After the Sheriff’s Sale, in Minnesota, you usually have six months, called the REDEMPTION PERIOD, during which the mortgage needs to be paid in full either by refinancing, a cash payment or selling the property to satisfy the mortgage(s). You do not need to move until the end of the redemption period or the sale of the property. In many cases the only option is to either let the property go to full foreclosure or sell the property. It is often better for your credit to sell the property and satisfy the mortgage than to let the bank foreclose. However, in this market the odds are very high that the value of the property is less than the mortgage(s). That brings us to the SHORT SALE.

SHORT SALES

A SHORT SALE is when the bank agrees to take less than what is owed, and to allow the property to be sold at a loss. This way the lender removes a non-performing loan from their portfolio and lessens the risk of selling the property at even a greater loss after a foreclosure. Not to mention all of the carrying costs the bank may have during and after a foreclosure. The seller is then released from the loan with less damage to their credit than a foreclosure.
Short Sale Process
A Letter of authorization to release information is sent to the lender. This allows the realtor to talk to lender. The property is listed on the MLS for sale. A Short Sale Package is assembled and sent to the lender. This includes a hardship letter, a financial statement, monthly bills, debts, income pay stubs, tax forms, etc. The realtor sends this to the lender for review. An offer/Purchase Agreement is received. The lender reviews entire package, including the offer. The lender may negotiate terms or price of offer. The property is sold & the owner is released of debt liability.

Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com/
http://www.forestlakesliving.com/
http://www.theaverygroup.com/