I’ve met with several sellers recently who’ve decided to go with short selling their home. They are forced into this position because what they owe the bank is greater than the value of the property. If you’re thinking of opting for a short sale, here are 5 steps to get started:
- Be prepared for a difficult experience. It’s much harder to unwind a loan/mortgage than it is to get one. It will be a long process, with lots of paperwork and documentation plus it won’t follow the norms of a normal home sale. But it will offer you a solution to not be trapped in your home anymore.
- Be certain your agent has real short sale experience. You will drive your self crazy if you simply go with the most experienced agent in your neighborhood. Short sales are a whole different type of transaction and experience is a must.
- Unless you have real hardships expect to bring money to the table. Health issues, lack of employment, and depleted finances are some examples of those who may not have to pay. But I have a seller short selling their home for $340,000 and the bank was being asked to forgive $90,000 so the sellers could sell the home. They were getting a divorce but both had good jobs. In the end they gave the bank $5,000 but the bank ate the other $85,000 — not a bad deal.
- Start working on your documents. You will have to document everything about your finances including assets, liabilities, a hardship letter, income, and expenses. A real estate agent experienced in short sales will give you a good list to prepare you.
- Learn to be patient. The process doesn’t always make sense and it can take a long time. For example, when pricing a short sale I start high. High enough so we minimize the showings. Then we drop the price every few weeks. The idea is to demonstrate to the bank that you tried and tried t sell the home for as much as possible to recover the maximum amount of funds for them. You don’t want the bank to kill the deal because they feel the home is worth more.