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Health & Fitness

Short Sale Process for Sellers and Buyers

Great tips on the short sale process for buyers as well as sellers. This is a must read before you jump into buying or selling a short sale.

The short sale process is a confusing
one, even for licensed real estate agents. The most frustrating piece is that
no two short sales are the same.  It does
not matter whether you're a buyer or seller, every single one is different.  There are certain things  you need to know depending on which side of
the fence you're on so we will give you some generalizations to help you
understand the process from both sides.

I want to start by explaining a short
sale is when a seller can no longer afford to make payments on their home and they
owe more than the home is worth. They go to their banks and say will you allow
us to sell the home for less than what we owe? This is what creates the short
in short sale. The banks will compile all of the market data from the listing
agent along with all of the other information from the seller to determine
whether they will allow the short sale to happen or not.

If you're a seller the most important
thing for your bank to know is that you have a hardship. Some examples of a
hardship would be job loss, job transfer, medical illness, divorce or a myriad
of other things. You have to be able to demonstrate to the bank that there is
legitimate reason why you can no longer afford the home you're in. What the
banks are going to ask of you will be what is called “the package.” Included in
this is  hardship letter, the last two
years tax returns, your last two bank statements, a budget of your monthly
expenses and your last two pay checks. Starting this process sooner rather than
later is always advantageous to you as a seller because the more information
that a listing agent can supply to the banks ahead of time the smoother the
process can be. Remember not only are you trying to get out from under your
debt you're also trying to make it attractive for a buyer to want to stay with
you throughout this whole process.

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If you're a buyer the most important
thing to know is you must have patience. Yes it's true there are all types of
nightmare stories that I could tell you about short sales that we have all
heard about many are true. But I believe you can really minimize your risk by
following some simple rules before you write an offer on a house. As a buyer
some of the things you're going to want to know are the following. Has there
been a Sheriff sale on the property? How many banks are involved in the short
sale? Is the seller willing to work with the banks if they are required to
bring some money to closing? Are they behind in their payments? These are among
some of the most important questions that need to be asked by your realtor. The
more information you can get on a property before you make a decision to write
an offer the better chance you have of entering into a contract with a
successful short sale. Were buyers get hung up is when they are not doing their
due diligence ahead of time in finding out all the specifics.

Some short sales can get done in 90
days or less. The average short sale takes 4 to 6 months. There's nothing you
can do to speed this up as a buyer but there are things you can do as a seller
to speed the process up. The most important thing is having all of your
documentation organized and submitted in a timely fashion. As a seller you want
to do everything you can to help make this process happen because it's your one
chance to be able to negotiate globally with all parties involved in your home.
For a buyer you want to look for a seller who is willing to do what it takes to
help get this short sale done. If you're looking at a house where the sellers
have moved out and have already distance themselves from the situation you may
want to ask more questions before you move forward.

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These are just a few of the basic things that you need to
know as a buyer and a seller when you're considering getting involved in a
short sale. As always if you have any questions please feel free to contact us
and will be happy to answer any questions that you have.

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