Selling a home that needs to be a short sale is a bit different.  Usually, you would be expecting to receive an offer that would be sufficient to pay off your total current mortgage balance and give the homeowner some extra cash.  In today’s real estate market, it’s probably likely that the home isn’t selling within the time frame expected and the value has probably gone down drastically that you’ll need to consider selling for less than what is owed on the mortgage…and this is considered a “short sale”.

A short sale will need a dedicated and serious real estate agent who is experienced with short sales.  Both you and the real estate agent will be negotiating with the lender(s) to accept less than what is owed.  The lender would forgive the remaining balance of the loan and you will not yield any money from the deal.  All the money would go to paying the closing and paying off the lender(s).

This is what you need for a short sale:

1. Get a real estate agent that is experienced with short sales.
2. Make sure the property is listed
3. Have a 3rd party authorization ready for your agent and/or other parties that will need your permission to speak to your lender on your behalf.
4. Call your lender(s) and be sure to speak with someone directly in loss mitigation or short sale department.
5. Make sure to write down everything that the lender tells you that they’ll need from you.  They may even send you an actual short sale application and/or package.

The short sale application will request the following:

• Hardship Letter: The letter will let the lender know why you need the short sale, such as an extremely serious injury/illness in the family that could have caused you to lose your job.  Maybe your rates and payments have gone up too much due to ARM resets.  Let them know how desperate your situation has become.
• Proof of Income: Or show proof of a loss of income using bank statements and tax returns
• Expenses: How much are your monthly utilities, groceries, car payment(s), phone, gas, cable, etc.
• A value statement/BPO/CMA: this statement will show your property’s current market value.
• Net sheet/HUD1: it will show exactly how much the lender will end up with
• Contract offer: the signed contract between the buyer and seller

Once the short sale process has begin, try to remain patient since you are trying to convince your lender to accept less than what you owe.

Do not expect to rely on the lender to be following up with you regularly…contact them!  Always make sure that you are following up constantly with the contact person assigned to your file to find out what the current status of your short sale is.

If things become stalled too much, it may help to have the buyer’s lender contact your lender.