A short sale is the sale of real property like a house for less than the outstanding amount of your loan. You won’t turn a gain on the sale and will actually incur a reduction, leaving you to pay the rest of the outstanding loan. The concept appears strange, but short-selling is actually an excellent way to stop an impending foreclosure, avoid bankruptcy and still somewhat maintain your credit history. Provided your lender is on board, you can block a continuous foreclosure and restrict your future expenses by conducting a short sale yourself.
Determine definitively a short sale is the only alternative. Short-selling needs to be your complete final effort to stop a pending foreclosure. In case you have not yet exhausted your choices –such as negotiating forbearance with your lender, refinancing and modification–do this first before you consider a short sale. Your lender also may ask that you try a number of these alternatives first before it will agree to a short sale.
Get in touch with your lender. Your lender must provide you permission to perform a short sale, and you need to find this permission in writing. If your lender agrees to a short sale, discuss the absolute minimum sale price your lender will approve, whether your lender will mitigate the rest of your loan and any other requirements your lender might have. Get all these information on paper from your lender.
Prepare your house for viewing. Clean and organize the house completely, including your lawn. If you can afford to, then complete minor repairs around the house to increase the property’s possible sale price. Skip major remodeling or repair jobs unless you can afford to pay in cash.
The evaluation, but only if your lender requires you. Many lenders forego the evaluation requirement for small sales due to impending foreclosure, focusing rather on increasing as much revenue as you can. If your lender does require an assessment, be ready to pay for the price; the cost of a house evaluation averages between $300 and $500 and varies based on the area, size and state of the property.
Market your property available. It’s possible to use a real estate agent to sell your house, but the price is your responsibility. You may even attempt selling your house yourself (“for sale by owner”) using categorized as both online and off, through fliers and by installing signs in your front lawn. Advertise the house as a short sale, that may generate a good deal of interest.
Present each viable offer you get to your lender immediately. Your lender should approve any bid before you will accept it. Never enter into an arrangement to sell without first securing your lender’s approval; should your lender reject the offer, the buyer can take you to court for breaching the agreement.
Finish the sale and attend final, as you otherwise would for a traditional sale. Your lender will send a representative to attend closing, also.
Transfer the proceeds from the short sale to your lender when they’re dispersed. Do not keep any money for yourself–your lender is eligible for the complete amount. If your lender didn’t consent to mitigate the remaining balance of your loan, set up a repayment schedule to the outstanding balance as soon as possible. Otherwise, your lender will seek a judgment against you and demand payment in full.