Selling a home can be a complex process, and when the outstanding debt on the property is more than its current market value, it can be even more challenging. In such a scenario, a short sale may be the best option for the homeowner.
What is a short sale?
A short sale is a type of real estate transaction in which the seller owes more on their mortgage than the current market value of the property. In a short sale, the seller negotiates with the lender to sell the property for less than what is owed on the mortgage. This allows the seller to avoid foreclosure and the lender to recoup some of their losses.
Steps to selling a home as a short sale
Contact a real estate agent with experience in short sales. A real estate agent who specializes in short sales will have the knowledge and expertise needed to navigate the complex process. They can guide the homeowner through the process and help them avoid costly mistakes.
Gather documents from all lien holders that will need to be paid at the close of escrow. Lien holders include, but are not limited to loans, equity lines of credit, property taxes, insurance claims,
mechanic liens, Utility company liens, HOA liens,
Contact the lender. The homeowner will need to contact their lender and inform them of their desire to pursue a short sale. The lender will then require the homeowner to submit an application and other required documentation.
Third-party authorization form. Homeowners will need an authorized representative to negotiate the short sale on their behalf. These parties may include their real estate agent and/or a professional short-sale negotiator.
List the home for sale, obtain, and accept offers. The real estate agent will help the homeowner market the property and negotiate the best possible offer.
Get lien holders to agree to a short sale with the best offer.
The homeowner representative (real estate agent) will negotiate with all lien holders until everyone is in agreement with their payment through escrow based on the accepted offer.
Close the sale. Once the offer is accepted and approved, the sale can proceed to closing. Escrow is typically longer on short sales, lasting 60-90 days compared to a typical 30-45 day escrow.
Selling a home through a short sale can be a complex process, but with the help of a knowledgeable real estate agent, it can be done successfully. By following these steps, a homeowner can sell their home even if the outstanding debt is more than its current market value.
Give me a call if a short sale option may be in your future and we can discuss your situation to determine the best course of action. 916-778-8659
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