What is a short sale?

A short sale occurs when a home seller owes more on their mortgage than the contract price, thus coming up 'short' on funds. The seller can bring funds to the closing table to cover the difference, or they can work with their mortgage company to get approval to sell the home for less than the owed amount.

Why would lenders allow a short sale? They want to sell loans, not manage property. Successfully completing a short sale could avoid the foreclosure process, which is complicated and expensive for lenders.

Lenders will usually allow you to sell short if you can meet the following criteria:

1. Has the home's market value dropped below what you currently owe on your mortgage, according to recent comparable homes sold in your area?

2. Are your payments current? Current payments may not rule out a short sale if other factors are leading to foreclosure.

3. Can you show distress? Unemployment, bankruptcy, death or divorce are all hardships the lender will consider.

4. Do you have a buyer? Prepare a Net Sheet that shows the sale price you will receive, costs of the sale, unpaid loan balances, outstanding payments and late fees.

5. Do you qualify for the Making Home Affordable government refinancing or loan modification program? If you purchased your home before January 1, 2009, and are having trouble making your payments, you could be eligible for modification of your loan's terms.

See http://www.makinghomeaffordable.gov

Contact your lender and ask to speak to a decision maker who is authorized to approve your short sale. Provide a statement letter detailing your circumstances, such as loss of job, medical problems, or whatever has caused your financial distress.

Be willing to supply proof of assets, including recent bank statements, savings accounts, money market accounts, and anything else of tangible value. The lender may want to go back six months or a year to see your credit history.

Show the lender your buyer's purchase offer along with a comparative market analysis from your listing agent.

The key to a successful short sale is to get started on a solution early. Contact your lender for help, before you get behind on your mortgage payments.

If you are a Long Island resident needing help with a possible short sale, please reach us today. We are here and always happy to answer any questions.

Vintage American Realty, Long Island, NY