Life Of A Short Sale...When You Owe More Than Your Home's Current Value

If you're a seller in a short sale situation you should always seek legal council before starting a short sale, NEVER let anyone advise you to stop making payments!

When working with a Real Estate agent you must provide them with a written statement authorizing them to represent you in any negotiations with the lender and make sure to show the loan number on all contacts.
As a seller you MUST send a hardship letter to the lender advising them that you can no longer make payments on the loan. (This is most important!)

Here's an example:

Dear Sirs,

As a result of very poor health condition we are unable to continue to make any payments on our obligation to your company.
Since the real estate market will not support the amount of the loans on our home we are asking for you to reduce the amount of the loan so that we can sell the home.

Thanking you in advance,
Mr. and Mrs. Jones

or

Dear Sirs,

We are no longer able to make any more payments on our loan with your company. We have the home listed with a real estate company however every agent agrees that our home is over priced due to a change in the real estate market. We need to sell our home however we owe more than we can sell it for.
We are asking for your company to reduce the amount of the loan so that we can sell the home.

Thank you,
Mr. and Mrs. Smith

Once you have an agreement with an agent to take on your home as a listing make sure all loans and marketing costs including commissions, even if they are grossly overpriced, are shown with the remark "subject to lender approval." The agent's listing (copy) must be sent to the lender.

Next, a B.P.O. (Broker Price Opinion) letter must be sent to the lender showing all current homes for sale in the area of the subject property including comparable sales within six months. Pictures of the subject property and comparable sales are always helpful. At this time you realtor should ask for a commitment from the lender to allow you to reduce the sales price. Your realtor should contact their Title Representative to order a listing preliminary title report!

Remember the seller's net sheet showing all costs including commissions is very important because you are asking for a reduced loan amount. It's also very important to remember that as a seller you CANNOT receive any proceeds from a short sale.

If you're Real Estate agent finds you a buyer, make sure they get a loan approval letter from the buyer's lender before they submit the offer to your lender.

Several lenders might offer different options to the seller, the most common are:

A forbearance agreement
A reduced loan amount
Foreclosure or a deed in lieu

Ask your Real Estate agent more about these options when offered. If you're having trouble finding a great short sale agent I strongly recommend The Global Trust Team. They're expertise and experience in short sales will save you both time and money. Contact them immediately if you feel it's time to start the process.