The process of selling a home in a short sale takes longer than that of a conventional sales transaction. For one thing, the lender must approve any offer that comes in, and it is not uncommon for the process to take a few months before the offer is approved or denied. The lender will look at many different things, such as the purchase price, any service fees associated with the sale, and liens on the property. Find Out If a Short Sale Is Right for You.
How a Short Sale Affects Your Credit Score: What Homeowners Need to Know
Lenders are reluctant to accept a short sale unless it is backed by a thorough hardship letter. This document describes the seller’s financial situation in detail and makes a compelling case that it is impossible to continue making mortgage payments. This will often be the deciding factor in whether or not the lender accepts the short sale. This letter should include corroborating material, such as medical bills and pay stubs, or a termination notice from a former employer.
Another important consideration is that a short sale will not usually provide any cash proceeds for the seller. The homeowner’s lender will take all of the money that is received from the sale and use it to pay off the mortgage balance. This leaves the seller with no personal or financial equity in the house, and it may be difficult to qualify for a new loan in the future.
For this reason, it is critical that the correct price be chosen for the property in a short sale. A real estate agent who is experienced in completing short sales can help ensure that the price is accurate based on local comparable sales.