What Are The Steps In A Short Sale?
Short sales are not necessarily complicated but do require some work on your part and your agent's part if one is involved.
- Figure out the true value of your property. Many times a real estate agent can provide a market analysis and give you a good idea of what your home might sell for. You can also use Zillow or other real estate related sites to determine the rough value of your home. If the market is moving down keep in mind that your homes value may be moving down as well and estimated valuations may be valid for only a short time.
- You also need to calculate your estimated closing costs. Items such as a title report, escrow, appraisal, attorney fees, agent commissions, unpaid property taxes etc. may add up to a substantial amount of money.
- You'll need to know how much you owe on your property. Include all loans on the property in your calculation.
- Calculate your equity. Normally the value of your home is more than the total of the loans and closing costs. If your closing cost estimate plus your loan amounts are higher than the value of your property then a short sale is a possibility.
- You'll need to contact your lender and explain your situation. Be sure you talk to someone who has the authority to make the required decisions. Usually lenders have a loss mitigation department that you can contact. Lenders are under no obligation to accept a short sale but many times it is in their best interests to do so. Some lenders will not consider a short sale until you have missed a payment or two. Some will not accept short sales at all. You'll need to know where your lender stands with regard to short sales so contact them as soon as possible.
- Consider your tax obligations! Do not underestimate this! Many times there can be a substantial tax obligation after a short sale has occurred. Be sure to talk with an accountant or tax attorney to figure out how much money you may owe the IRS if you proceed with a short sale.
- Find a buyer and sell your property. The lender will still have to approve the buyer?s offer but once they do you can sell your property.