Video:How to Do a Short Sale
with Leanne GoffIn real estate, a short sell happens when a house needs to be sold for less than the home loan value. Certain steps and procedures need to be taken for a seller to complete the short sell process.
Transcript:How to Do a Short Sale
Hi. My name is Leanne Goff with Walnut Realty in Boulder, Colorado and I am here for About.com to talk about how to do a short sale.Selling a Home for Less than the Loan Value is a Short Sale
A short sale is when a seller needs to sell their home and current market conditions will only allow them to sell for less than their loan value. A short sale will also affect your credit score but it can be significantly less than a bankruptcy or foreclosure. Before listing your home as a short sale, it is important to speak with a real estate lawyer and an accountant. These people will tell you about the legal and tax ramifications that may occur when you sell your home for less than what is owed.First, call a real estate agent who is familiar with your lender. Next, it's a good idea to call the mortgage broker who helped you get the loan and call the lender who is holding the note; they may have suggestions that will help you with the process. Next step will be when you have an offer or contract to buy the home, you need to put together a net sheet and authorization letter. That will outline the taxes and closing costs and realtor fees based on the offer price, so the bank has a clear picture on what they expect to net at the end of the process.
Draft a Hardship Letter to Explain the Short Sale to the Bank
A hardship letter is an important part of the short sale process. A hardship letter explains to the bank why a homeowner needs to sell the home for less than what is owed. You will need to provide proof of income and assets in the package. Be sure to have copies of your bank statements, W-2's, and your tax returns. A comparative market analysis is prepared by the real estate agent to let the bank know what the current market value for the home is. The purchase agreement, or offer to buy, along with the listing agreement between the agent and the seller will need to be included in the short sale package.Thank you so much for watching. For more information, please visit us at About.com.