Homeowners who need to sell a property as a short sale, should be aware of what it takes to facilitate a sale with your bank. The very nature of a short sale means the bank agrees to accept less than what is owed on your mortgage. Obviously, the bank is under no obligation to grant a short sale. However there are compelling reasons why they might allow a short sale, assuming the right criteria is met.
Criteria To Qualify for a Short Sale
As a seller you must be able to answer the following questions to determine if you will be qualified for a short sale:
- You are having difficulty in paying the mortgage due to a change in income
- The value of your home has dropped and you must sell to relocate for a job
- Your mortgage is in default
- You do not have the income or savings to pay the difference between what is owed and the proceeds from the sale of the home ( including expenses).
Once it has been determined the bank will consider your short sale, you should hire an experienced real estate broker who will keep you informed and help direct short sale discussions with the bank. You will then need to start working on your Short Sale Package, the contents were listed last week on my post entitled "Short Sale ~ How to Get Started."
Making Contact with Your Bank
"A Journey Begins with the First Step." Confucius
Beginning the short sale process by talking to your bank is probably the most difficult step to make. Once the decision is made the next positive step is to communicate with the bank. Before you do that, let's talk about getting organized.
Obviously this is a very stressful, emotion filled time but you must get a grip and channel your emotions elsewhere. When talking to an officer or staff person at the bank, they aren't necessarily going to have emphathy for you. To them it's a job or a business. The best way to communicate with them is to be prepared, treat the transaction like a business and ask how best you can proceed in order to work through this situation.
Get a folder or a notebook dedicated to the process. Every time a call is made record the time, date and a synopsis of the conversation, including the name of the person to whom you were speaking. If you commit to returning a call or submitting documents by a certain date, record that too and do it. Show that you are trustworthy and live up to your word.
Always be polite, even if you have to go into a primal scream after you disconnect the phone!
The Next Stage
Once you find a real estate broker to assist you, you will then be able to relinquish bank contact to your broker. This can only be done in writing by signing an "Authorization to Release Information" giving your permission to the bank to speak to your listing broker.
Now as soon as you receive a good offer on your home, your broker will be able to negotiate your short sale.
In the meantime, you need to prepare that long list of items for your Short Sale Package. Don't delay, when things start happening, they happen fast! So the sooner you get the work done the sooner you can expect to relax a little!
Your broker hopefully has performed SUCCESSFUL short sales before. In doing so he/she should know how to review and critique your financial statements. It is important that everything you can possibly include here be included. Your statements are going to be scrutinized by several people, so be sure they are accurate and you can provide proof if necessary.
Short Sale Negotiation
The bank will discuss with your broker the terms of the contract, but it is up to you to choose the contract you will accept. Odd that I have to state this, but it is not unusual to have multiple offers on a property that is priced correctly. I discussed this in an early post "Evaluation of the Short Sale Offer, Do we Accept or Reject?"
The main take-away in that post was for the seller to exercise caution in accepting offers that have not been validated. So many offers are made from parties who aren't serious about buying but are more serious about buying cheap. They disappear when you need them most. Avoid them at all costs.
Summarized in Five Seller Suggestions
- Be prepared (collect your supporting data)
- Get organized (take notes, review them regularly)
- Be professional (emotionally detached and rational)
- Be patient (take a deep breath)
- Seek professional assistance from an experienced real estate broker
About the Blogger
Kristal Kraft is a long-time veteran of the real estate industry in Colorado. Licensed as a Broker since 1984 having experienced both the ups and the downs of the real estate market she helps buyers and sellers meet their goals. If you are looking to buy or sell real estate whether it be a traditional sale/purchase or a short sale needing experienced guidance, give Kristal a call. 303-589-2022.