Debbie Soden's Blog

Say you need to sell your home, but the balance on your mortgage is greater than the amount that the home will sell for in today’s marketplace.

As an example:  If your mortgage is $500,000, but your home is worth $450,000, you are $50,000 short. You will need to get find ready, willing and able buyer to make an offer on the property, and then get the lender to accept the offer.

Before you do anything, I’d suggest that you contact an experienced Real Estate Lawyer, and Accountant to discuss your situation, review your finances and to be sure that you fully understand the pros and cons of Short Selling your home.  Your Realtor is not qualified to give you advice regarding legal or tax issues, neither is your best friend, nor is your neighbor. You need professional advice.

Here’s the process:

• You hire a Realtor who Specializes in Short Sales to sell the property.
• Your Realtor lists the property and makes it known publicly that you can accept an offer on the property, but the Lender has final approval.  If the lender agrees to the price, the house is sold.  If the lender disagrees to the price, no sale.
• You will need to demonstrate to your Lender that you made every effort to advertise, market, and price the property to get the “highest and best” price in today’s marketplace.
• You get an offer from a qualified Buyer, and you accept the offer.
• Your Realtor sends the offer to the Lender along with all of their required documentation.
• Your Lender reviews the offer and determines that they can accept the offer, (or not)
• If the offer is accepted, the transaction closes escrow and the new buyer receives title to the property.

Of course, it’s not that simple, but basically, that’s how it goes.

Everybody doesn’t qualify for a Short Sale.

You’ll need to submit a letter to your Lender that explains that you are experiencing a “Hardship” that prohibits you from meeting their obligations.

Hardships would include: Medical Emergency, Divorce, Bankruptcy, Loss of Employment, Relocation of Employment or Death.

Your lender is going to ask you to provide tax returns, bank statements and financial reports to prove your financial situation.

Once your Realtor has submitted the offer to the Lender, along with all of the required documentation, you need to be patient, because it could take some time before you get a response.

If you are lucky, your Lender responds quickly and the sale goes through.  If the Lender takes too long, your Buyer may buy something else or just change their mind.  In which case, you need to get another offer from another ready, willing and able buyer and start again.

In my opinion, the biggest mistakes that many Sellers make when they are selling a Short Sale property that they forget that if they don’t make every effort to get the best price for their home, the bank may not approve it, and the next step could be foreclosure.

GET THE HOUSE READY TO SELL! You need to box up your personal belongings, declutter closets and cabinets, remove unnecessary furniture, and manicure the grounds.. clean, clean, clean!  You may not want to,or need to spend any money, but you do need to do everything in your power to get a bank approval for your Short Sale with the first offer.

PRICE THE HOUSE TO SELL! Price it to high and it will just sit on the market and you won’t get offers. Price it to low and Buyers will drive the price down because they will assume something is wrong with the property. Even though you won’t participate in the proceeds from the sale, you want to price your home to sell at a price that your Lender will accept.

If you have any questions about the short sale process or would like to know how much your home would sell for in today’s marketplace, just give me a call at 805-300-0936 or visit my website www.DebbieSoden.com.