How to Short Sell Your Home
Knowing how to short sell your home is important, especially if you’re having problems paying your mortgage. After investing in a home for many years, it is very painful realizing that you cannot have it anymore because you’re in a bad financial situation and can’t pay the mortgage as required anymore.
Paying your mortgage can become challenging and that’s where the idea of short selling your house comes in. Instead of having a huge loss, you can reduce it by performing a short sale on the house. To make the short sale a success, you need to get a short sale specialist involved.
Here are the steps to take if you want to short sell your home:
Decide if the short sell is the right step
Before proceeding with the short sale, you need to find out if it’s the best way to go. Start by knowing what your property value is. Get in touch with a real estate agent and request for an opinion regarding your property value. The agent will normally compare your house with the latest sales in the area. Afterward, you should know how much you owe your lenders. Calculate all the loans from different lenders and find out if you have a deficiency. If that’s the case, then you should consider short selling your home.
Consider short sell alternatives
Even when short sell seems like the only alternative, let it be the last option. Try out other short sell alternatives such as a deed in lieu of foreclosure and government refinance programs. A deed in place of foreclosure is an agreement whereby you will be required to sign over the deed to your house to the bank, and the bank will consent in full satisfaction of your outstanding debt. On the other hand, you can try out the government refinance programs such as the Home Affordable Modification Program and Home Affordable Refinance Program.
If you’re not successful at one of these government programs, then you should proceed with short selling your home.
Contact the lender and conduct a short sell
To proceed with the short selling on your house, start by contacting the lender. Tell them that you want to talk about a possible short sell on your house. The lender will then review your account and let you know if it is possible. Alternatively, you can have a short sale specialist to contact the lender(s) on your behalf.
When the lender accepts the short sell, you will proceed to complete the requirements for a loss mitigation application. Some of the documentation that you will have to submit includes a financial statement, recent tax returns, proof of current income, copies of recent bank statements, and a hardship letter. It is advisable that you advertise the property for sale and hire a real estate broker to get the best offer possible.
Complete the short sale agreement with your lender
After putting your house on sale, you will need to notify the lender when you get a suitable offer. You will have to involve the broker and lender from start to finish of the sale. To complete the sale and prevent any liability toward the lender, ensure that you complete the deal with a written settlement agreement. The agreement should verify that the lender has accepted the sale in full satisfaction of your mortgage.
Know the legal problems of a short sell
In normal situations, when you sell your home with a mortgage on it, you must pay the mortgage in full. Failures to pay your mortgage will more than likely lead to legal problems. That’s why you may need to engage a short sale specialist to help you through this process. A short sale specialist or a CPA can help you be aware of the tax consequences that await you.
Overall, filing for a short sale may be better than foreclosure or bankruptcy.