Making the Home of Your Dreams a Reality!: There IS An Alternative to Foreclosure~Part 1~Short Sale

There IS An Alternative to Foreclosure~Part 1~Short Sale

There ARE alternatives to Foreclosure. In this series, we will be looking at what these alternatives are and the upside to them versus letting you home go into foreclosure.

Have you been working with your lender to obtain a loan modification? If you are like many people in America, you may find this process a very stressful, confusing and an impossible task. Have you been turned down for a loan modification? Getting close to the potential of foreclosure? Have you considered the alternatives? The first alternative is the Short Sale. You may have heard the term, there is a lot of talk about it these days.  A short sale is where your current lender agrees to accept a lower payoff of the mortgage than what you currently owe. Even if you have been turned down for a modification, it does not mean you will be turned down for a short sale!

A short sale will entail putting your home up for sale. This may be a difficult decision, as you have done everything within your power to stay in your home. However, a short sale may be the best option for you at this time, for your credit and for your sanity! So what should you expect when you list your home for sale as a short sale?

• Documentation ~ your current lender will require quite a bit of documentation from you in order to get the process started. This will include income and asset documentation, a listing agreement as well as a hardship letter. Your agent should be able to provide you with a short sale package to get you started. This preliminary documentation may be able to be provided to your lender prior to listing your home for sale. This will provide your lender with appropriate time to evaluate if you qualify for a short sale.
• List Price ~ The sales price of your home is an imperative part of the short sale process. Your current lender is not going to agree to a fire sale on your home. They are trying to take as minimal of a loss as possible. They are going to want to try to get as close to market value as they can. Working with an agent who can provide a Comparative Market Analysis or Broker Price Opinion will help price the home right. Your lender will also order either an appraisal or Broker Price Opinion of Value for confirmation of market value.  
• Proactively Address the Issue~ By taking action to proactively avoid foreclosure, you will find the impact on your credit is not as severe and the ability to purchase a home can occur usually after 2 years from the date of short sale.
• Extended Time Period ~ You can expect the process to be lengthy. Your lender will take a certain amount of time to review your financial documentation to approve your ability to sell the home as a short sale. They will then also review the offer once it has been received and accepted.
• Reviewing and Understanding Offers ~Working with your experienced short sale agent, once an offer or offers have been received, you will want to discuss the offers and determine which offer will be best suited for a guaranteed close. There may be offers submitted that would not be considered by the lender. You only want to submit one offer to the lender. By submitting multiple offers or an offer that has no possibility of getting accepted is just wasting the banks time, your time and the longer the home will sit on the market. You do not want to be in a position of losing your home to foreclosure by erroneously submitting any offer "just to get the process started". One of the reasons short sales do not close is by submitting an offer too far under market value and the lender denies it.

Working with an agent that is experienced in the short sale process will help eliminate a lot of the stress that comes with selling a home in this situation. Every lender is different on their requirements, each may require a different process but all will require the same basic information from you.  

In this series we will be looking at alternatives such as deed in lieu of foreclosure, reinstatement, refinance, and bankruptcy.

Are you looking for an Alternative to Foreclosure? Let's make an appointment to discuss your situation today!

While I am not an attorney and can not advise you as to the right solution for you, I can help you locate the proper professionals and HUD approved counselors to assist you through this difficult time.