Century 21 Associates Realty LLC 
     Karen J. McLinden
      Phone 508-677-3233
       Fax 508-679-2006
       657 Pleasant St., Fall River, MA 02721 
                                                                                                                                   
 
Residential Real Estate, Commercial Real Estate, New Construction, Investment Property, Rentals, First Time Home Buyers, Relocating Assistance, Short Sale Assistance.   Areas Include But Not Limited To: Fall River, MA - Swansea, MA - Somerset, MA - Westport, MA - Dartmouth, MA - Tiverton, RI - Assonet, MA - Freetown, MA - Berkley, MA - Taunton, MA - Dighton, MA - Rehoboth, MA - Seekonk, MA - Warren, RI - Portsmouth, RI - Middletown, RI - Little Compton, RI - New Bedford, MA - Lakeville, MA - Middleboro, MA - Fairhaven, MA -   Wareham, MA

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What is a Short Sale???  Information for Buyers and Sellers.

Sellers Information

Buyers Information

SELLERS

There are many ways to lose a home but signing away ownership in a manner that destroys credit  and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale."

When lenders agree to do a short sale it means the lender is accepting less than the total amount due. Not all lenders will accept short sales  especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for a short sale.

Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.

 

  • Call the Lender
    You may need to make a half dozen phone calls before you find the person responsible for handling short sales. 
  • Authorization and Release Sheet
    Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you give this form  to the lender giving the lender permission to talk with those specific interested parties about your loan. I have this form when you need it.
  • Preliminary Net Sheet
    This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. If you do not know how to calculate any of these fees I can help you with this.  IIf the bottom line shows cash to the seller, you will probably not need a short sale.
  • Hardship Letter
    This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized.  Make sure to provide any supporting documentation.
  • Proof of Income and Assets
    Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. You will need to provide two years tax returns, four pay stubs, a financial statement (usually provided by them) and a copy of your mortgage payments to all lenders.
  • Copies of Bank Statements
    If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it's probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
  • Comparative Market Analysis
    Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). I can prepare a CMA for you, which will show prices of similar homes:
    • Active on the market
    • Pending sales
    • Solds from the past six months.
  • Purchase Agreement & Listing Agreement
    When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. 

It is a long process so try to be patient and do the best you can to get the banks the information they request as quickly as possible. Now, if everything goes well, the lender will approve your short sale!

IMPORTANT NOTICE: Century 21 Associates Realty is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.

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BUYERS

Buyers pursue short sales to get a good deal. So when you see a price listed for a home that you think is too low for the neighborhood, before you jump on that price like hot fudge on a sundae, you may want  to find out if the home is a short sale.

You should make sure you understand what could come up if you make an offer on a pre-foreclosure, short sale home. It's not simple  and be aware that very few can close in 30-60 days.

A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.

Make your offer contingent upon the lender's acceptance. Give the lender a time frame in which to respond, possibly up to one week, after which, you will be free to cancel. If the lender is under no pressure to make a decision, the paperwork will sit on a desk.

In addition, the lender will want to see that you have your own loan available and you are pre-approved. You will need a pre-approval letter to submit with an offer. 

Generally, the lender will not pay for customary items that a seller would pay. These include home protection plans for the buyer, buyer credits of any kind and pest / termite inspections. A buyer will be asked to purchase the property "as is," which means no repairs. You still have the right to do a home inspection but it may be at your expense to have water turned on, de-winterize and re-winterize a property, have utilities turned on and possibly even pay for repair/replace smoke detectors and carbon monoxide detectors for certification.

If you do have a home inspection remember that you may not be able to negotiate like you would with an average seller.  The seller usually  doesn't have the funds available to do repairs and the banks do not usually give credits.

 

Once the seller has accepted your offer, you will go to purchase and sale and that will be sent  to the lender for approval. You do not have a deal until the lender accepts. Also,  the lender will receive a copy of your earnest money deposit. Do not be astonished if the lender asks you to increase it.

Short sale approval is normally a long process taking anywhere from 30 days to over 4 months.  Sometimes the property is foreclosed before a short sale decision is reached.  You may want to find out if there is more than one bank involved as well because if there are two banks you will need both banks to approve the short sale before it could close.

I hope this information is helpful.  If you do decide to put an offer on a short sale property I hope that it goes well and you are able to get a great buy! Please feel to contact me if you have any questions! 

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 2013, Karen McLinden & Century 21 Real Estate LLC. CENTURY 21 is a registered trademark licensed to Century 21 Real Estate LLC. Equal Housing Opportunity. Each Office is Independently Owned and Operated.

 

 2013, Karen McLinden & Century 21 Real Estate LLC. CENTURY 21 is a registered trademark licensed to Century 21 Real Estate LLC. Equal Housing Opportunity. Each Office is Independently Owned and Operated.