All about Foreclosure Short Sales
All about Foreclosure Short Sales
Many homeowners are losing their homes to foreclosure. There are several steps involved in the foreclosure process, including ways to stop the foreclosure. These steps include refinancing with a loan officer, loan modification, selling the home, conducting a short sale or credit counseling agencies. Most states require a period of redemption giving the seller a certain amount of time to cure the default and regain control of the property.
What is a Short Sale?
When the lender agrees to accept less than the full amount owed on a foreclosed home, they conduct what is called a short sale.
Advice for Those Considering a Short Sale
Contact Your Lender as soon as you can’t afford the payments on your home. Find a short sale buyer by advertising, or through a real estate service or short sale specialist. Your lender doesn’t want to foreclose. They would rather work toward a profitable alternative. Once you have a potential buyer, you are directed to the department that handles short sales. There will be certain information that will have to be submitted to your lender before a short sale is considered.
Here’s a list of items you may need when considering selling your home as a short sale:
- Income statements or recent paycheck stubs
- Bank statements of all your assets
- A hardship letter that describes the reasons you can’t make your payments. You’ll also need any documentation such as medical statements or proof of lost wages).
- An appraisal of your property
- The projected proceeds of your property after the mortgage is paid off. This will be a negative amount in a short sale including fees and closing costs.
- A listing agreement and purchase agreement
The steps are different for each lender but by being prepared ahead of time, you can save a lot of time during this process.
Can I Buy a Short Sale Foreclosure Home?
Not all lenders accept short sales, even though is often found in the real estate industry. One way to buy a short sale home is to negotiate directly with the seller before the foreclosure is final. Know your rights as well as the sellers before approaching a seller of a short sale. There are several facts to consider if you’re interested in selling or buying property this way.
- Number one is to seek legal advice from a from an informed real estate attorney.
- Number two is to know the tax implications of a short sale.
- Number three is to get advice from a certified public accountant.
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