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    A Short Sale is the sale of real estate where the borrower will be short of the balance owed on the debts/liens secured on the property. It is the Loss Mitigation Department within the creditors that will evaluate the borrower’s ability if they can qualify for the short sale process. This special department has a set criteria that the borrower must meet in order for the lien holder/ lender to accept less than the amount owed for the debt.
     


     


    What items are usually needed to start the process? *

    1. Financial Hardship Letter describing why you, the borrower, has become in default
    2. 3rd-party Authorization Letter with your signature (required for your REALTOR® to negotiate and help you in the process of the short sale)
    3. Last 2 years of Tax Returns (or they may have you sign a 4506-T form that allows them to acquire the transcripts of your tax returns)
    4. Last 60 days of Bank Statements (checking and savings)
    5. Last 30 days of Paystubs (if you have become unemployed it’s a good idea to write and sign a separate document to include in the income section)

    * Note: Some lien holders have their own financial packages that you must complete in detail regarding your financials.
     
    This can be a very long process and will be subject to many levels/department(s) in the approval process, so be patient! After time elapses on the original information submitted, the lien holder may also ask for the same documents to be updated while your file is being processed.
     
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    What other factors effect the process?

    If you have a 2nd mortgage, HELOC (Home Equity Line of Credit), Home Owners Association dues, and/or special assessment judgment, this can also effect the short sale process and you will be required obtain short sale approval from those lender/creditor(s) as well. If the property is sold for less than the borrowers note, this is known as a deficiency. Depending on the type of loan, the creditor may have the option to place a claim on the borrower for the deficiency, known as a Deficiency Judgment, which allows the creditor/lender(s) to attempt recouping their losses on the note(s).

    Part of the process will include the lender/creditor(s) to determine the current market value of the property by obtaining an independent evaluation of the property, known as an appraisal. In some cases it is known as a Broker’s Price Opinion (BPO), or a Broker Opinion of Value (BOV).
     
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    Appraisals / BPO / BOV

    Every property is different from the next and, to be fair, a personal evaluation of each helps the creditor/lender determine the true value of the property. The appraiser is a 3rd party that has an unbiased opinion. Some factors that contribute to the assessment are the following:

    • Location of the property
    • Square footage, number of bedrooms and bathrooms
    • Condition of the property
    • Quality of finishes throughout home
    • Age of home

    Again, each property is unique, none are the same. The most important aspect is having a REALTOR® that knows and understands how this process works so that you can be successful!
     
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