The Short Sale Process for Sellers
Short selling can be confusing. So we have put together a simple, honest guide to the short sale process for sellers. If you’re a buyer, we have a similar resource for buying a short sale.
Overview: How the Short Sale Process Works
A short sale is comprised of several key stages:
- Agent selection
- Declaration and proof of hardship
- Property valuation
- Short sale application
- Short sale agreement
- Find a buyer
- Negotiation (with lender and buyer)
Now let’s examine each stage step-by-step. The most important decision you make is in selecting an agent. Your short sale agent is your advocate, your guide, and your negotiator. Be selective and find an agent that you feel comfortable working with. Ask questions and make sure they provide answers to your satisfaction. A bad short sale agent can cost you a lot -- time, money, and more. An excellent short sale agent can make the seven steps above feel like a breeze. Do your due diligence and find a reputable, experienced agent.
Assuming you found a qualified and reliable agent, now comes your contributions. Your contributions consist of providing proof of hardship and in completing paperwork. Your agent will guide and facilitate the remainder of the process.
How to Short Sale A House: Step-by-Step
First, find an agent. As mentioned above, don't select just any agent that says s/he "does short sales." Find an experienced agent. Check references. We’ve made it easy for you at ShortSaleAgentFinder.com. Check out our network of qualified short sales agents and find one for free.
Second, assemble and declare proof of hardship. Before moving forward, you'll need to prove that you've endured such hardship:
- job loss
- loss of income
- death of co-borrower
- declining local market property values
- business failure
Next, you'll need to draft a letter of hardship (talk to your agent about the ins-and-outs of this letter) and follow with proof of hardship, which often requires financial documents to substantiate your case.
Third, have your property appraised. At the end of the day, the short sale is a win-win for everyone if conducted properly. The lender is compensated for a mortgage they may have never been paid out on or would have been underpaid on had it gone into foreclosure. (It's a pre-emptive measure on their part. ) The buyer gets a great deal on a house. The seller (you!) finds debt relief with minimized effects on credit score and the potential for purchasing a home in the future. So what's the key here? The appraisal! Your property value needs to meet the win-win criteria above. The property is ideally valued at less than the value of your mortgage (thus you are "underwater").
Fourth, you'll need to apply for a short sale through your lender. Basically, you'll do paperwork by providing proof of hardship and your property valuation. Your agent will walk you through the details. Just know--paperwork is in your future!
Fifth, find a buyer for your property. An effective real estate agent will find a buyer for your short sale property. This brings the great triad together--lender, seller, and buyer. Once your lender has approved you for a short sale and you've found a buyer, it's negotiation time! Not so fast though....
Sixth, negotiate the sale. Your agent - or if you elect to use an attorney, your attorney - will negotiate the details of the sale. This is why we emphasize working with experienced agents. From beginning to end, including negotiation, the average time of a short sale varies between two months up to nine months. Be patient! Negotiations are complex and require a qualified agent to make the process painless.
Seventh, seal the deal. With your agent you'll cross your I's and dot your T's. Ultimately, you have now relieved yourself of debt, protected your credit, your future, and put a smile on both the lender and buyer’s faces.
Ready to speak with a qualified short sale agent? Still have questions? Contact an agent now.