If you are considering a short sale

[SD Realtor]

To help those who have recently posted about their distress. Here is what I have found out regarding short sale listings from both the listing side, and the buyers side. I am also in the process of helping a few other clients out who have not yet listed but are working on it.

1 – If you think you can just list your home and sell it short without talking to your lender, you are wrong. The requirements by many lenders for a short sale vary but they do have many facets in common including:

a – You will need to show distress. This generally includes tax returns, w2 statements, bank statements, 401k statements… Basically ANY income or assets you own will need to be documented and sent to the lender.

b – The same is true with liabilities. You need to have all your liabilities documented and delivered as part of the package.

c – Hardship letter. You will need to document the hardship, did anything extraordinary happen, a job loss or an illness? Did something change like your loan reset? This is important because it helps the lender COVER THEIR ASS. The fact is that most of them should never have passed your loan through underwriting and documented proof of a change of your status since they had underwritten your loan helps them battle the investors.

d – In many cases I have encountered, the lender will require that you have already tried to sell your home, and/or are in default. This may have indeed changed but if you have documentation of your previous attempt to sell then that will be helpful.

e – Getting market comps for your home will be crucial. No doubt the lender will perform their own analysis but ANY data you can provide will be helpful.

f – If you have two mortgages against your home, (as sdrealtor posted earlier) you MAY be able to negotiate the second out of the picture or basically pay it off for pennies on the dollar if not less. The logic being that if a buyer comes and a short sale gets approved, the second will most likely be washed out anyways. If a short sale never happens and the home goes to foreclosure, then the second gets washed out. So really most every outcome is that the second gets washed away.

g – Most lenders have a very defined process they like to follow. My experience with them is counter to everyone who posts here and seems to recommend a more maverick approach of you telling the lender what you want to do. For those of you who actually deal with lenders and are in or have been in distress, these posts are somewhat laughable. The lenders have very defined groups you will deal with, from loss mitigation, to loan workout, to asset managers you work through their process, they don’t tailor it for you. My experience has been that the more you work with them and get to know their process, (and let me tell you it is MADDENING sometimes) the more successful you will be.

Finally, this is by no means an endorsement to do a short sale verses walking away from your home or performing a deed in lieu of foreclosure. Don’t mistake it for that. However even if you are performing a deed in lieu of foreclosure, you will have to get it approved by the lender. You WILL have to work with them. You WILL have to deal with all the documentation.

You can instruct your lender, through written permission to deal directly with your attorney or realtor in any of these cases.

Again, don’t construe this post as advice to walk away or don’t walk away or short sell or not short sell. Just don’t think that a short sale or deed in lieu of foreclosure is something you just do without putting in some effort. Also I DO NOT KNOW THE DIFFERENT RAMIFICATIONS OF HOW YOUR CREDIT WILL BE AFFECTED IN ANY CASE. Contraman posted and he inferred it is easy to fix your credit after a foreclosure. Maybe it is, maybe it is not. I have found that even with recourse loans on some short sales, people are getting the deficiencies forgiven. Every loan/lender varies.

It is always recommended to talk to an attorney and/or a CPA.

[Deal Hunter]

One Change to your info above, SD. Everything you have up there is right except the part where the banks won’t talk to you unless you are in default. This is the number one misconception about short sales.

You MUST have a legitimate hardship that you can prove. However, homeowners who KNOW that they won’t be able to make the payments should not wait to contact the lender with their hardship until they go late on payments. If you know that you are 2-3 or even 6 months away from running out of savings and not having the $$ for your mortgage, you can get the short sale process started immediately.

This is the case of people who are losing their jobs, or have lost their businesses due to losses in banking, construction and real estate. You have legitimate hardships that you can prove NOW and you can list your home immediately subject to approval of short sale. You stand the best chance if you can provide a complete financial statement, tax returns, bank statements and if possible your pink slip or lay off letter.

Your hardship letter need not be long or complex, as long as you clearly state at the beginning that you can NO LONGER PAY THE MONTHLY PAYMENT. Then a short blurb about how your income has changed or the new adjusted amount is beyond your means to pay. Then summerize by clearly stating that you can NO LONGER PAY THE MONTHLY PAYMENT.

You can still keep making payments on time up to the close of your short sale. You can even tell the lender, and show them with your bank statements that you won’t be able to make the payment past April, etc.

We’ve done this in Las Vegas with 3 short sales since November of 2007. The homeowner never went late, preserved their credit and successfully sold their homes on short sale.

[Deal Hunter]

One Change to your info above, SD. Everything you have up there is right except the part where the banks won’t talk to you unless you are in default. This is the number one misconception about short sales.

You MUST have a legitimate hardship that you can prove. However, homeowners who KNOW that they won’t be able to make the payments should not wait to contact the lender with their hardship until they go late on payments. If you know that you are 2-3 or even 6 months away from running out of savings and not having the $$ for your mortgage, you can get the short sale process started immediately.

This is the case of people who are losing their jobs, or have lost their businesses due to losses in banking, construction and real estate. You have legitimate hardships that you can prove NOW and you can list your home immediately subject to approval of short sale. You stand the best chance if you can provide a complete financial statement, tax returns, bank statements and if possible your pink slip or lay off letter.

Your hardship letter need not be long or complex, as long as you clearly state at the beginning that you can NO LONGER PAY THE MONTHLY PAYMENT. Then a short blurb about how your income has changed or the new adjusted amount is beyond your means to pay. Then summerize by clearly stating that you can NO LONGER PAY THE MONTHLY PAYMENT.

You can still keep making payments on time up to the close of your short sale. You can even tell the lender, and show them with your bank statements that you won’t be able to make the payment past April, etc.

We’ve done this in Las Vegas with 3 short sales since November of 2007. The homeowner never went late, preserved their credit and successfully sold their homes on short sale.

[Deal Hunter]

One Change to your info above, SD. Everything you have up there is right except the part where the banks won’t talk to you unless you are in default. This is the number one misconception about short sales.

You MUST have a legitimate hardship that you can prove. However, homeowners who KNOW that they won’t be able to make the payments should not wait to contact the lender with their hardship until they go late on payments. If you know that you are 2-3 or even 6 months away from running out of savings and not having the $$ for your mortgage, you can get the short sale process started immediately.

This is the case of people who are losing their jobs, or have lost their businesses due to losses in banking, construction and real estate. You have legitimate hardships that you can prove NOW and you can list your home immediately subject to approval of short sale. You stand the best chance if you can provide a complete financial statement, tax returns, bank statements and if possible your pink slip or lay off letter.

Your hardship letter need not be long or complex, as long as you clearly state at the beginning that you can NO LONGER PAY THE MONTHLY PAYMENT. Then a short blurb about how your income has changed or the new adjusted amount is beyond your means to pay. Then summerize by clearly stating that you can NO LONGER PAY THE MONTHLY PAYMENT.

You can still keep making payments on time up to the close of your short sale. You can even tell the lender, and show them with your bank statements that you won’t be able to make the payment past April, etc.

We’ve done this in Las Vegas with 3 short sales since November of 2007. The homeowner never went late, preserved their credit and successfully sold their homes on short sale.

[Deal Hunter]

One Change to your info above, SD. Everything you have up there is right except the part where the banks won’t talk to you unless you are in default. This is the number one misconception about short sales.

You MUST have a legitimate hardship that you can prove. However, homeowners who KNOW that they won’t be able to make the payments should not wait to contact the lender with their hardship until they go late on payments. If you know that you are 2-3 or even 6 months away from running out of savings and not having the $$ for your mortgage, you can get the short sale process started immediately.

This is the case of people who are losing their jobs, or have lost their businesses due to losses in banking, construction and real estate. You have legitimate hardships that you can prove NOW and you can list your home immediately subject to approval of short sale. You stand the best chance if you can provide a complete financial statement, tax returns, bank statements and if possible your pink slip or lay off letter.

Your hardship letter need not be long or complex, as long as you clearly state at the beginning that you can NO LONGER PAY THE MONTHLY PAYMENT. Then a short blurb about how your income has changed or the new adjusted amount is beyond your means to pay. Then summerize by clearly stating that you can NO LONGER PAY THE MONTHLY PAYMENT.

You can still keep making payments on time up to the close of your short sale. You can even tell the lender, and show them with your bank statements that you won’t be able to make the payment past April, etc.

We’ve done this in Las Vegas with 3 short sales since November of 2007. The homeowner never went late, preserved their credit and successfully sold their homes on short sale.

[Deal Hunter]

One Change to your info above, SD. Everything you have up there is right except the part where the banks won’t talk to you unless you are in default. This is the number one misconception about short sales.

You MUST have a legitimate hardship that you can prove. However, homeowners who KNOW that they won’t be able to make the payments should not wait to contact the lender with their hardship until they go late on payments. If you know that you are 2-3 or even 6 months away from running out of savings and not having the $$ for your mortgage, you can get the short sale process started immediately.

This is the case of people who are losing their jobs, or have lost their businesses due to losses in banking, construction and real estate. You have legitimate hardships that you can prove NOW and you can list your home immediately subject to approval of short sale. You stand the best chance if you can provide a complete financial statement, tax returns, bank statements and if possible your pink slip or lay off letter.

Your hardship letter need not be long or complex, as long as you clearly state at the beginning that you can NO LONGER PAY THE MONTHLY PAYMENT. Then a short blurb about how your income has changed or the new adjusted amount is beyond your means to pay. Then summerize by clearly stating that you can NO LONGER PAY THE MONTHLY PAYMENT.

You can still keep making payments on time up to the close of your short sale. You can even tell the lender, and show them with your bank statements that you won’t be able to make the payment past April, etc.

We’ve done this in Las Vegas with 3 short sales since November of 2007. The homeowner never went late, preserved their credit and successfully sold their homes on short sale.

[SD Realtor]

Dealhunter I have not run into any cases like that but it sounds perfectly logical. I would say that in the case you spoke of, where essentially you are getting close to running on fumes but you are not there yet, I would presume that in addition to the hardship letter you will eventually need the documentation, (assets/liabilities/tax returns/w2s) prepared so that when they are ready to talk turkey you can show the them the beef so to speak.

Sounds quite logical to me, it just has not been my experience yet.

SD Realtor

[SD Realtor]

Dealhunter I have not run into any cases like that but it sounds perfectly logical. I would say that in the case you spoke of, where essentially you are getting close to running on fumes but you are not there yet, I would presume that in addition to the hardship letter you will eventually need the documentation, (assets/liabilities/tax returns/w2s) prepared so that when they are ready to talk turkey you can show the them the beef so to speak.

Sounds quite logical to me, it just has not been my experience yet.

SD Realtor

[SD Realtor]

Dealhunter I have not run into any cases like that but it sounds perfectly logical. I would say that in the case you spoke of, where essentially you are getting close to running on fumes but you are not there yet, I would presume that in addition to the hardship letter you will eventually need the documentation, (assets/liabilities/tax returns/w2s) prepared so that when they are ready to talk turkey you can show the them the beef so to speak.

Sounds quite logical to me, it just has not been my experience yet.

SD Realtor

[SD Realtor]

Dealhunter I have not run into any cases like that but it sounds perfectly logical. I would say that in the case you spoke of, where essentially you are getting close to running on fumes but you are not there yet, I would presume that in addition to the hardship letter you will eventually need the documentation, (assets/liabilities/tax returns/w2s) prepared so that when they are ready to talk turkey you can show the them the beef so to speak.

Sounds quite logical to me, it just has not been my experience yet.

SD Realtor

[SD Realtor]

Dealhunter I have not run into any cases like that but it sounds perfectly logical. I would say that in the case you spoke of, where essentially you are getting close to running on fumes but you are not there yet, I would presume that in addition to the hardship letter you will eventually need the documentation, (assets/liabilities/tax returns/w2s) prepared so that when they are ready to talk turkey you can show the them the beef so to speak.

Sounds quite logical to me, it just has not been my experience yet.

SD Realtor

[patientlywaiting]

Good list of items to consider, SD Realtor.

How about some items to consider for homeowners who have assets, are not undergoing hardship but who want out of their real estate because they just don’t feel like “throwing away money” anymore?

I know that this makes some people’s blood boil, but as real estate “analyts” we should consider all realistic options.

[patientlywaiting]

Good list of items to consider, SD Realtor.

How about some items to consider for homeowners who have assets, are not undergoing hardship but who want out of their real estate because they just don’t feel like “throwing away money” anymore?

I know that this makes some people’s blood boil, but as real estate “analyts” we should consider all realistic options.

[patientlywaiting]

Good list of items to consider, SD Realtor.

How about some items to consider for homeowners who have assets, are not undergoing hardship but who want out of their real estate because they just don’t feel like “throwing away money” anymore?

I know that this makes some people’s blood boil, but as real estate “analyts” we should consider all realistic options.

[patientlywaiting]

Good list of items to consider, SD Realtor.

How about some items to consider for homeowners who have assets, are not undergoing hardship but who want out of their real estate because they just don’t feel like “throwing away money” anymore?

I know that this makes some people’s blood boil, but as real estate “analyts” we should consider all realistic options.

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