Will Short Sale
Stop Foreclosure For You?

To qualify for a short sale you must experience financial hardship and inability to afford your monthly mortgage payment.
In a real estate short sale your lender has to agree to accept a lower sale price than what you owe on your home. It is a simple process but it is
not easy.

Lender's Considerations.
Your lender is only interested in profit and will only consider it if the cost is less than the cost of a foreclosure.
The best way to go about it is through a specialist who has experience and who will aggressively pursue the process. Most short sales are denied by the lender for various reasons. Such as missing or incomplete documents or unrealistically low price offer.

Be prepared before you call your lender.

• Write a hardship letter explaining why you can't afford to pay your mortgage. To see examples of hardship letters go to the hardship letter page.
• Collect all financial documents required by your lender, such as tax returns and recent bank statements.
• Hire a certified appraiser for complete appraisal. A property appraisal with photos and recent comps with pictures must be provided to your lender.
• Contract with a real estate agent. A proof of your listing agreement with a real estate agent must be provided.
• Provide your lender a sale contract with a buyer.
  

At this point your lender will order a Broker's Price Opinion (BPO) from an independent real estate broker. The BPO will be used by your lender as a gauge.
In most cases the lender will not accept offers much lower than the BPO.

Can you do it yourself or should you use a professional?
Yes it is possible that you will succeed on your own. However statistics show that most attempts by home owners fail.
Contact a short sale specialist who is familiar with the system. He will be very helpful in providing your lender with a package that is complete. Using a professional will give you a better chance to succeed.

Tax Liabilities
It is important to specify in the contract that if the lender accepts a lower price for your home you will not be held liable for the
difference between what you owe and the sales price. If all goes well you will be taxed on the forgiven portion as phantom income. In most cases this tax problem can be worked out with the help of a good CPA. In some cases you will have to file bankruptcy to get rid of it.

Timeline
Typically, it takes about 60 to 90 days to complete the process. You can always renegotiate, if your lender rejects the first offer. Your lender will be more likely to work with someone who has experience and who knows the system.

What if your home does not sell?
Ok your lender agreed to your proposal but:

• The buyer changed his mind.
• The lender wants to get more offers.
• The property value keeps dropping.

If your home didn't sell and you are not paying your mortgage your lender may accelerate the foreclosure process. At this point a loan modification can still be pursued.

Credit damage
A short sale will damage your credit by dropping your score between 60-100 points and stay up to seven years on your credit repot depending on the state you live in.
Contact me if you have any questions and if you need any help to stop foreclosure on your home, remember I have been there personally.

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