Many people find the idea of a short sale mysterious and confusing, but the truth is that it is straightforward once you understand what it entails. Even some listing agents out there don’t know the proper way to handle a short sale. This seems as if it would be something every real estate agent knows, but not everyone is interested in the art of the short sale. That is why having Wheaton short sale attorneys on your side can be an excellent option.
There are two reasons why banks grant a short sale. The first is when the seller has experienced hardship. The second is when there is clearly not enough home equity to pay the mortgage once the costs of the sale have been paid off.
Types of hardship that are considered include:
- Death
- Divorce
- Bankruptcy
- Medical emergency
- Transfer for job out of area
- Reduced income or unemployment
The person selling the property will be responsible for preparing a package of financial information which will be submitted to the bank providing the short sale. Every bank has unique requirements, but most are similar. Some of the package items for the short sale that will be required consist of:
- Two years of W-2s
- Authorization letter for agent
- Seller’s hardship letter
- 30 days of payroll stubs
- Two years of tax returns
- Preliminary closing statement
- Two months of past bank statements
- Completed RMA or financial statements
- List of comparable sales or similar market analysis
A buyer should request a list of comparable sales from their agent before writing up a short sale offer. The bank will expect to receive pricing that is close to the average market value and is unlikely to release a mortgage at an extremely low price point. Once the seller has accepted an offer, the listing agent will be required to send specific items to the bank.
- Listing agreement
- Seller’s short sale package
- Executed purchase offer
- Buyer’s preapproval letter, proof of funds, and copy of your check for earnest money
It can take a long time for the buyer to receive a response from the bank. The listing agent should call the bank on a regular basis and keep notes throughout the entire process. The typical short sale process will include the following process:
- Bank acknowledges file receipt. Can take a week to one month.
- The negotiator is chosen, can take up to one month.
- Broker price option is ordered, which bank may not share.
- An additional negotiator could be required, which may take another month.
- The file is reviewed based on PSA. Can take two weeks to a month.
- All individuals sign an Arm’s Length Affidavit.
- Bank issues an approval letter for short sale.
If you need help with your sale in Wheaton, short sale attorneys may be able to help. Covert & Covert LLP offer assistance for people just like you. You can learn more on the company website or reach them at 630-717-2783.
