As a result of the increasing foreclosures in the last couple of months, the term "short" sale has become more and more often used. Maybe you are wondering what exactly does a short sale mean and how you can do a short sale in real estate. Well, we all know that when a borrower is in default on a mortgage they are obliged to make back payments but it is not only that. They may even owe late fees or have to pay for different services. Thus all the etiquity of a the property can be speedily eaten up and if the borrower has any problems with the payment and is unable to bring the account current the property is very often foreclosured on the current lender.
The foreclosing process can actually be really time consuming as in some states it may take up to the breathtaking two years. That is why many lenders choose the short sale option and finalize the deal right away. The extra costs, which are involved in a short sale in real estate often change in amount and may lead to up to 40 % loss of the mortgage amount. However, as we explained, short sale is often conducted because of the long-lasting foreclosure procedures.
When a borrower begins to have difficulties or feels any financial discomfort paying the requested fees and they can no longer afford doing that, they should immediately contact the lender. Foreclosure on the property is the last thing a lender would want to do. Before considering a short sale on a house or other property, the lender will usually require a detailed information about the property to be submitted by the borrower in order to make the deal. The requested information may include the following details:
- income documentation of the borrower
- borrower's assets should be verified by bank statements, which may also be requested by a lender
- hardship letter, in which the borrower should sincerely describe their financial problems and list the reasons why they are in the financial position they are currently
- purchase and listing agreement if such are available, of course
- fairly estimated market value of the property - appraisal from a local Realtor (CMA) may also be required
- an official sheet in which proceeds during previous transactions are listed in detail.