Preparation is the key to a smooth and successful short sale transaction. As with many things in life, proper planning is always the preferred method when approaching a financial transaction. And that is just what a short sale transaction is, a financial transaction involving multiple parties all with different goals or objectives.
So to make sure you are fully prepared to even start the short sale process here are the essential items any real estate broker will need to begin the analysis.
#1. Two years of personal financial documents. I’m talking everything you would need to apply for a mortgage loan. Essentially that is just what you are doing. The lender that has to approve your short sale needs to know if you really can’t afford the current mortgage. They will always look to see if there is a easier way to save their investment before a short sale, mainly loan modification.
#2. Previous loan documentation. Gather everything you have on the previous loan(s) you’ve had on the property from the time you purchased it until now. This will give the broker a clearer understanding of you current loan terms and future adjustments. An old appraisal can also aid in the short sale process as the current lender is able to see previous values as compared to NPV or net present value.
#3. Get the property on the market. There is no short sale without a buyer, and now more than ever, buyers are a selective breed. Gone are those days of standing in line the night before to buy a new property the next day. Buyers are scarce. For many reasons it’s harder to get financing. So buyers can be picky. The earlier your broker can get marketing your property the better.
#4 Negotiate for a release of all future liability. One of the keys to any successful short sale is making sure the seller does not owe anything more after the short sale is closed. When at all possible make sure to consult your CPA, Real Estate attorney, and Real Estate broker when considering a short sale.
#5. Stay patient and resolved. If this short sale is for your primary residence, this is much more emotional than if this is an investment property. So it’s important to maintain an analytical approach whenever possible. There will be people coming into your home and it makes the prospects of moving out that much more heart wrenching. So know that you are not alone and although this will be a blemish on your credit, in time, it will become less and less of a concern for creditors seeking to lend to you later.