Selling your home can be a daunting task, especially if you are considering a short sale. A short sale occurs when the proceeds from the sale of a property will not be enough to cover the outstanding mortgage balance, and the homeowner will need to negotiate with the lender to accept a lower amount. In this article, we will discuss what to expect when selling your home with a short sale.
1. Extended Process
Selling your home through a short sale can take a longer time than selling it in the traditional way. This is because you have to wait for the lender’s approval before the sale can go through. The lender will typically review the seller’s financial situation and determine if they qualify for a short sale. Additionally, the lender will need to evaluate the property to determine its current market value, which can delay the process further. The entire process can take several months to a year, so patience is key.
2. Relinquishing Control of the Sale
When you sell your home through a short sale, the lender will be in control of the negotiation process. This means that the lender will have the final say regarding the negotiated sale price, commission, and other terms. The lender’s primary goal is to minimize their losses, so the homeowner may have to accept a contract that may not be in their best interest.
3. Financial Ramifications
A short sale can have significant financial consequences, including damage to the credit score of the homeowner. A short sale stays on the credit report for up to seven years and may affect the homeowner’s ability to obtain future loans. Additionally, it is essential to know that the lender may have the right to seek the remaining balance of the mortgage after the sale through a deficiency judgment.
4. Required Documentation
Selling a home through a short sale requires an extensive amount of documentation. The lender will need to review documents such as the seller’s financial statements, hardship letter, proof of income, and other documents. It is crucial to keep a record of all the documentation to make the process run more smoothly and prevent unnecessary delays.
5. Short Sale Approval is not Guaranteed
The lender may reject the short sale if they determine that the homeowner cannot qualify for a short sale or if they believe it is not in their best interest. The lender may also reject the short sale if the offer does not meet their expectations. However, you can lower your chances of rejection by submitting a viable and reasonable offer.
Conclusion
Selling your home through a short sale can be a time-consuming process, and you have to be patient throughout the entire process. It is essential to have a clear understanding of the short sale process and the possible financial ramifications before embarking on this route. Additionally, it is crucial to work with experienced professionals such as a real estate agent and a real estate attorney to ensure that the process goes as smoothly as possible.
