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    ABOUT SHORT SALE

    rgmao 2011-06-21 10:08

    All statements at this section are only the review of our experience from the short sale transactions we have handled. We do not guarantee their accuracy and reliability. For any legal advice, please contact an attorney.

    What is a short sale?

    When a property’s for sale price is less than its total amount of mortgages owed, the sale of such a property is called short sale.

    Short sale process

    Many articles and realtors tell that, owner shall obtain an offer before applying for short sale from lender. We do not want to say that is wrong, but, I would like to say that it would delay the short sale approval. Most of the lenders recommend homeowners to notify lenders their intention to sell their properties, start short sale application prior to receiving an offer, in order for lenders to assign a negotiator to the case, complete property evaluation and borrower financial evaluation in advance.

    1, before you retain a realtor to list your property, we strongly recommend you to contact your

    lender to discuss your financial hardship, affordability to see the possibility for loan

    modification.

    2, when loan modification is not applicable to your situation, you shall provide the following

    information to your lender(s) to start the short sale process:

    a. A financial hardship statement-----a brief, written explanation of your financial hardship.

    b. A financial worksheet------- indicating your income, your saving, and your monthly

    expenses (include lender your tax return, paycheck stub and your bank statement.

    c. All information must be signed and dated by each borrower before sent to lender(s).

    3, you may sell the property by yourself, or hire a realtor to handle the sale. If you choose to

    list the property with a realtor, you shall send each lender a copy of the listing agreement,

    provide all lenders the listing agent contact information, and write a letter to authorize the

    listing agent to have access to the information of your mortgage account(s).

    4, soon after an offer is received, listing agent shall submit all lenders the offer with the

    following:

    1. Fully executed purchase agreement.
    2. Net sheet/HUD.
    3. Buyer’s pre-approval and proof of down payment.
    4. Executed listing agreement.
    5. The property’s MLS listing.

    5, normally, if every thing is ready, it takes about 40 days for your lender to process an offer.

    6, normally, 1st lender will offer an acceptance with some conditions including the fund

    distribution to junior lender(s).

    7, listing agent shall negotiate with 1st lender, junior lender(s), buyer, seller, selling agent to

    reach a final deal. Once a final deal reach, a revised HUD will be confirmed.

    8, a short sale approval is good for 30 days. It means the escrow shall be closed in 30 days

    after lenders’ approval.

    For seller

    A foreclosure sale might not protect you from junior lender(s) filing deficiency judgment(s) against you, therefore, shore sale might be a better solution when you have more than one loan on your property. But we strongly recommend you to consult your attorney before making any decision.

    Many short sale property owners found the loan(s) still there after the short sale closed.

    When your realtor submits you an approval from lender, you shall make sure it is a settlement, not only a sale/lien release. If you are not sure, consult your attorney before accepting the lender's offer.

    For buyer

    Buying from a short sale, you might possibly save some money, but at the same time, you need to prepare to wait for an extra long period for closing, and you might waste your time for nothing, since your offer might not be accepted by lender or the investor after your long waiting. Therefore, it is very important for a buyer to judge the closing feasibilities of a short sale property before making offer to such short sale property

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