Real estate short sales definition
Don't be embarrassed if you don't know what a short sale is. This article will explain what a short sale is and whether you are a good candidate for one or not.
If you owe more than your house is worth, you may need to do a real estate short sale.
A short sale means that you sell the property. But you get a lower price than what you owe. Then you go to your lender, or both lenders if you have two loans. You get them to approve the sale of your house.
So there are two parts to a real estate short sale:
Sell the house much like you would any other house
Get the lender to approve the sale
Selling the real estate short sale
Selling a short sale property is like selling any other property. Except you are not trying to get a certain price. You are trying to sell quickly.
Many real estate agents may resist lowering the price enough to sell the house quickly. So it is important either to do the nine day house sale, or to find a realtor who will price the house low so it sells fast. See the nine day house sale how to sell your house in nine days when there are no buyers.
Getting a real estate short sale approved
The lender now has to approve the sale. The buyer is waiting to close. Now it's time to go to work and negotiate the short sale with the lender. Or with both lenders if you have two (occasionally even three.)
This is where it gets tricky. You want to have things like:
- A hardship letter
- Proof of your financial situation
- The offer
- A brokers' price opinion on the property showing that the offer isn't too outlandishly low
- Pictures and information on the property including work that may need to be done to fix it up
The purpose of this is to convince the lender to approve the real estate short sale.
How a short sale settles at closing
When the property is sold, the lender then has to approve the short sale. At that point it is ready to close. The buyer brings funds into the escrow or lawyer's office. And the funds are paid out to your real estate agent, your lawyer or short sale expert who helped negotiate the short sale, and various closing costs. The remainder of the funds are paid to your first mortgage and if you have two mortgages, some goes to the second mortgage.
You do not see any of the funds. All the money goes to pay closing costs and to the lenders.
Hopefully, you have negotiated so you are released from further liability, and so that your credit is okay and you can move on with your life.
See walking away from your mortgage for more information. And also see should you stop making your mortgage payments. And how to sell your house fast.
And please watch my video on how to avoid foreclosure by doing a short sale even if you have a second mortgage foreclosure situation. The answers are here. I will never share your name or email with anyone.
And watch this video on short sales and foreclosures. This is a screen shot — just type in your email and I'll get you to the real video. Thank you.