An Expert’s Guide to Succeeding in Your Short Sale
The decision to sell short is an important one. But for underwater homeowners in financial distress, it can sometimes be the best option. In a short sale, the seller remains in control of the transaction, and no legal proceedings are necessary. Unlike a foreclosure or bankruptcy, which are court proceedings and become a matter of public record, a successful short sale need not become public and the impact on the seller’s credit rating is often less severe and quicker to repair than the alternatives.
But a short sale is different than a typical sale. Here are some tips for success if you or your client has decided to pursue this route:
- Use an experienced lawyer: It’s important that the lawyer be involved from the beginning of the marketing process and choosing someone with experience and a good track record is imperative. Our office has closed many short sales and can effectively guide the seller and broker through the process. Typically the fee for a short sale is paid by the seller’s bank, so no upfront fees are required.
- Get your materials together: Submitting a complete package with a compelling financial hardship letter is a key to success. The short sale lawyer must assemble the package and submit it to the proper bank department. Omitting documents or completing the forms incorrectly will slow down the process, and might cost you the deal.
- Let buyers know: The short sale buyer must be notified of the seller’s intent to sell short, and must cooperate. Often the payoff bank will require proof of buyer’s funds to close, or evidence of financing, and without these documents the short sale won’t be approved. Moreover, the process can take longer than a typical sale, so the buyer must agree to the timeline.
- Don’t stop paying your mortgage if you can afford it. The impact on your credit score will be less if you remain current on your mortgage payments throughout the short sale process. Of course, many sellers with financial hardship cannot afford to do so, but if you have the cash flow to make the payments then keep making them, as it will help the recovery of your credit score.
- Be patient. Banks are quicker than they used to be in processing short sales, but the process can be frustrating while the bank makes decisions.