Steps to Complete a Successful Short Sale

A successful short sale requires careful planning, thorough documentation, and effective negotiation with the lender. Follow these steps to navigate the process smoothly and maximize your chances of success.

1. Consult with a Real Estate Professional: Hire an experienced real estate agent who specializes in short sales. They can guide you through the process, help you find qualified buyers, and negotiate with the lender on your behalf.
2. Contact Your Lender: Notify your lender of your intent to pursue a short sale. Request a short sale application or package from the lender, which will typically include forms and a list of required documents.
3. Gather Financial Documentation: Prepare all necessary financial documents, including your hardship letter, income statements, bank statements, tax returns, and a list of your monthly expenses. These documents will demonstrate your inability to continue making mortgage payments.
4. Submit the Short Sale Package: Complete the lender’s short sale package and submit it along with all required financial documentation. The lender will review your application to determine if you qualify for a short sale.
5. List the Property for Sale: Work with your real estate agent to list the property at a competitive price based on current market conditions. Ensure the property is marketed effectively to attract potential buyers quickly.
6. Receive and Review Offers: Once offers are received, review them with your agent and select the most suitable one. Be prepared for negotiations with potential buyers to reach an agreement that meets both their expectations and the lender's requirements.
7. Submit the Offer to the Lender: Submit the accepted offer, along with the buyer’s proof of funds or pre-approval letter, to the lender for approval. The lender will review the offer to determine whether it meets their criteria for a short sale.
8. Negotiate with the Lender: Be prepared for further negotiations with the lender. They may counter the buyer’s offer, request additional documentation, or impose certain conditions. Your agent can help you navigate this process.
9. Obtain Lender Approval: Once all terms are agreed upon, the lender will issue a short sale approval letter. This letter outlines the approved sale price, any conditions, and the deadline for closing.
10. Close the Sale: Work with your real estate agent, attorney, and title company to complete the necessary paperwork and close the sale. Ensure that all parties, including the lender, are aware of the closing date and that all conditions in the approval letter are met.
11. Fulfill Any Remaining Obligations: Ensure that any remaining obligations, such as transferring utilities or clearing out the property, are completed as per the sale agreement. Also, confirm that the lender has released you from any further liability for the mortgage debt.
12. Consult with a Tax Professional: Short sales may have tax implications, such as being liable for taxes on the forgiven debt. Consult with a tax professional to understand your obligations and explore potential relief options.