Process, Investment Property Short Sale, Real Estate Denver

The short sale process may be tedious because of several documentations that some lenders require from the borrower. So it helps to be in-the-know and prepared on what to expect from it. The following are the most common steps you may encounter from the short sale process. The first thing is you need to make a few calls to know who will handle the short sale process. The point person would be the supervisor or the name of the decision-maker and not the ‘real estate short sale’ or ‘work out’ department. The next thing to do is to prepare a letter of authorization allowing the lender to disclose some personal information about you. You may ask for the help of your real estate agent, closing agent, Title Company, or lawyer if you want to compose a letter to the lender.

The next document you need is the Preliminary Net Sheet which contains the estimated closing statement that shows the sales price you wish to receive, the costs of sale, unpaid loan balances, late fees, and outstanding payment due including real estate commissions. Your closing agent or lawyer may help you prepare for this document. If the total shows cash to the seller, a short sale may not be necessary. Prepare for a lot of correspondence. One of these is in the form of the ‘Hardship Letter’. From the name itself, it is a letter that states all facts leading to your financial loss. The sadder the tone of this letter, the better. It should be followed by a plea to the lender to accept less than the full payment. Lenders are not that cold-hearted and they can understand your situation. Only if it is honest enough and devoid of any hocus pocus. You may need to divulge your proof of income and assets. Honesty is highly appreciated in this part. You have to divulge every savings accounts and other accounts, stocks or bonds, cash, or real estate that you might have and anything that is of value to you. This will guarantee the lender that the debtor has no capacity to repay outstanding loan balances. Bank Statements may also be presented to further prove this. It would be better if you would explain each of those lines in your account that reflects unaccountable deposits, large cash withdrawals, or an unusual number of checks. Lenders need transparency from their borrowers.

A Comparative Market Analysis is needed also to show prices of similar homes that are active on the market, on pending sale, and that are sold from the past six months. Your real estate agent could prepare this for you. This document will show the decline of the market and property values fall, which could a valid reason for the home-owner to sell his home to pay off the lender. Another of these documents that should be forwarded to the lender is a copy of the Purchase Agreement and the Listing Agreement to sell with a prospective purchaser. There would be a lot of renegotiation by the lender, especially when it comes to commissions. Lenders may refuse to pay fees like home protection plans and termite inspections.
Hopefully, if all goes well with your documents, the lender will approve your short sale. You may also negotiate for the lender not to report to the credit reporting agencies but be reminded that they have no obligations to do so. Credit report status is not always negotiable.
Reference: http://homebuying.about.com/od/4closureshortsales/a/shortsalebasics.htm