A short sale is a sale of real estate in which the sale proceeds fall short of the balance owned on the property’s loan. It occurs when a borrower cannot pay the mortgage loan for whatever reason. Some of the reasons could be unemployment, reduced income, divorce, medical emergency, job transfer out of town, bankruptcy, or death in the family. The lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure.

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 It is very important for sellers and buyers today to understand what a short sale is and the process that it takes. Because many buyers do not understand the short sale process they become impatient. Actually, the buyers who cancel the transaction prior to short sale approval are the biggest problem facing short sale specialists.

 In simpler words a short sale is a win-win solution for the current home owner, the lender, and also the buyers. The bank/lender gets the highest price for a quick sale at the current market price. The home owner gets their credit restored and gets relief from possible future legal actions like a foreclosure. In a short sale, the homeowners get complete relief from all of their mortgage debt. For a buyer a short sale is also a win-win situation for the reason that they can own a great property for a fantastic price.

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There are procedures the homeowners need to go through with the lender. The homeowner needs to prepare a financial package for submission to the short sale bank. Each bank has its own guidelines but the basic procedures are similar. The short sale package will consist of a letter of authorization, which lets your agent speak to the lender, completed financial statement, seller’s hardship statement, two year of tax returns and W-2s, recent payroll stubs, last two months of bank statements, HUD-1 or preliminary net sheet, and comparative market analysis or list of recent comparable sales. This will let your lender understand that you cannot continue paying for the property not that you just don’t want to. The typical short sale process at the bank may go like this, bank acknowledges receipt of the file, a negotiator is assigned, a BPO (broker price opinion) is ordered, the file is sent for review, the bank may want you to sign a Arm’s-Length Affidavit, then the bank issues a short sale approval letter.

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In the buyer side there are also some procedures they need to do. Before you write a short sale offer, the buyer needs to ask his or her agent for a list of comparable sales. The bank will want to receive somewhat close to market value. The short sale price may have little bearing on market value and may, in fact, be priced below the comparable sales to encourage multiple offers. Making sure the bank has everything they need for you is the best way to keep the process moving. It can take up to two or three months for the bank to respond back but it can also be quicker than that. If the buyer is the type with little patience, then a short sale is not for them.

 

The Jerry Pinkas Myrtle Beach Short Sale Team - is your local expert in all your Real Estate needs in the Myrtle Beach Area. Our Team is dedicated to inform our clients on how to be a pro in the local real estate market and avoid common pitfalls that are costly. www.myrtlebeachshortsaleteam.com