Real Estate Short Sale Rules

A short sale is not exactly a short process. It is, contrary to the name, a lengthy process involving a lot of legal and financial aspects. But there are many who are into trading real estate in short sale. It is typically in connection with real estate and more specifically so, houses. A short sale is considered when the proceeds of the sale are short of the balance which is owed on the property's loan. When there is an advertisement of a house for short sale, it is considered that the home is in preforeclosure state. Although it need not be so.

What is a Real Estate Short Sale

A short sale, is typically with regards to real estate and a house to be more specific. Mainly, it allows the lender and the potential defaulter to avoid a foreclosure on the property. Anything which can be done to avoid a foreclosure is done as foreclosure means a good amount of loss for the lender as well as headache for the individual who might not be able to pay the money. In such a situation, lender decides that he can sell the property at a lesser cost, which is better than not getting money and incurring losses on top of it. It is found to be a viable option than pressurizing the borrower to pay the money back.

Real Estate Short Sale Process

Well, the process of a short sale in real estate is not complicated, but is very cumbersome and lengthy and will be a test of your patience. It starts with the lender being contacted for discussing the chances of a short sale. Then this seller issues a letter about the authorization of release of the information about the loan and the property to the buyer or if there is an escrow agency, to it. Then the settlement statement will be reviewed by the lender, having the proposed selling price, the amount left to be repaid and itemized expenses and the like. Following that, a hardship letter for short sale is completed by the seller, having a description of all the financial difficulties faced by him. These are also required to be validated by the lender. This is important when buying a short sale. A broker is then contacted by the lender and the purchase agreement is scrutinized. This helps the lender decide if the agreement is reasonable and if the real estate commission is acceptable. You have to follow these things, there is no other way out. You cannot skip either of these things. The financial institution will be scrutinizing the proposal and it can take a lot of time and there is no way to dodge that real estate short sale process.

Things Recommended for a Short Sale

There are a few unwritten rules for a real estate short sale. Keeping them in mind will help you in making the process smooth. Here is more.

• First and foremost, speak to a trained and experienced real estate lawyer and an accountant to discuss short sale tax ramifications. This is extremely important.
• Call the lender and keep at it, till you get through to the right person.
• Have a preliminary net sheet, which is an estimated closing statement showing the sales price you expect to receive and all the costs of sale, including unpaid loan balances, outstanding payments due and late fees and real estate commissions, if any.
• Once you get into an agreement to sell with a prospective purchaser, keep a copy of the offer ready for the lender accompanied with a listing agreement and real estate short sale listings.
• In addition to this, keep proof of income as well as bank assets ready.

Keeping all these ready will help you go through the real estate short sale motions smoothly. Done properly, it is going to be a win-win situation for both the original lender, seller and he buyer.

At the end of the day, once you follow the real estate short sale rules and have all the things in order the lender will give a green signal. That's all! I close my treatise on short sale process here! All the best!