The word short sale is becoming more and more common these days. Because of the real estate boom of the mid 2000′s and the subsequent collapse of the real estate market, more and more homes are becoming upside down in their loan value. In short, the houses are worth less and then amount owed to the banks. In an effort to curb the foreclosure rates, banks have leaned on this not so new method to recoup some of their losses.
If a house goes into foreclosure, it cane be a lengthy drawn our process that doesnt end well for either the bank or the borrower. With a short sale, the bank can forgive some or all of the negative equity and allow the sale of the house to take place. This short sale process will allow the bank to find a new owner for the house and the previous owner can avoid some of the pitfalls of having a foreclosure on thier hands.
So just what is the Short Sale Process?
There are a few steps that are to be followed in the short sale process.
- Contact Lender – determine options
- Letter of Hardship – borrower must submit to lender explaining why they are unable to pay.
- Lender Review – The lender will review the situation. They will evaluate if this property/loan will be a candidate for a short sale.
- Broker Priced Opinion – The bank will order this BPO to determine an appropriate value for the home base on current market conditions in the area.
- Lender Approval – The lender will then evaluate any offers or deals to determine if they will be acceptable.
Expect the short sale process to be long and drawn out and you should also expect the unexpected. Often times with a short sale, you are stepping into uncharted territory.