A short sale may be the best way for some homeowner’s to avoid foreclosure, but what is a short sale?  How does an owner negotiate or work with their lender to avoid foreclosure?

According to Wikipedia:   A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold.

How should a homeowner negotiate terms for a short sale with their lender?  What should they watch out for??

1. Seller’s need to know that they will be liable for the difference between the sales price and the loan balance unless they can prove they can not pay it.
2. Seller’s should provide documents of financial hardship to their lenders such as layoff notice, medical bills or investment statements.
3. Seller’s should check all closing documents for the home for signs of  fraud.   In cases where questionable loan practices have occurred, lenders will be more negotiable.
4. If seller’s have more than one mortgage, talk to the lender in the last position first.  They have the most to lose if the house goes into foreclosure.
5. Make sure short-sale agreements don’t allow the lender to go after the buyer or seller for the difference at a later date.
6. Be motivated to Sell.   Provide a Comparative Market Analysis (CMA) or appraisal to the lender.  Reassure them that you will take every necessary step to sell the property, if they agree to work with you.
7. Always refer legal questions to a lawyer and financial questions to an accountant.

 Article of Interest:   Beware of Real Estate, Foreclosure and Loan Modification Scams

Thank you for visiting Why 6 Percent.   If you are selling by owner, but want to expose your property on the MLS and all major real estate websites such as Realtor.com, we are here to help.