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May 26th, 2010 10:33 AM by David W. Welch
Short sales have become a huge part of our real estate market here in Orlando with around 5,600 active and around 6,800 pending sales right now. Overall there are just under 16,000 total active listings and nearly 11,000 contracts pending. The first thing you should be prepared for as a seller is a relatively long process. Your lender or lenders must approve the short sale once you have a contract on your home, and with the number of these in process it does not move very quickly. I have to say, in my opinion it is much better than two years ago, but still takes some perseverance. I would say you should expect a two to four month approval process, which can be quicker or slower depending on the lender and the number of loans. The second important thing to be prepared for is the very real possibility the bank will say no.
If you are ready for the challenges and prepared to hear "no", then you will need to get some information together for your Realtor®:Your last two years tax returnsTwo most recent bank statementsTwo most recent pay stubsPersonal financial statementHardship letter
Your agent will also have to prepare some documents for your lender:Third party authorization formArm's length transaction statementListing agreementExecuted sale and purchase agreementTrial HUD-1
Your bank is trying to assess two things with this information. First, does your financial position warrant a short sale? Second, is the sales price appropriate for your marketplace? Here is a quick explanation of some of the information they need to make these determinations. The third party authorization simply allows the bank to discuss your short sale with your Realtor®. The Arm's Length Transaction statement acknowledges that the parties involved in the sale are not related. The bank does not want you selling your home to your relative at an artificially low price, so they can turn around and sell it back to you. The loan modification process has been estabilished for people trying to stay in their home. When the sale closes the sales expenses, including the sales fees charged by your Realtor® will be paid from the bank's proceeds. They want to make sure you have a valid listing agreement and they want to know what the terms and conditions of that agreement are. The sales contract and HUD-1 (closing statement) tell the bank what price and terms they are accepting as conditions of the short sale. The documentation you provide as the seller should be self-explanatory. These financial documents and hardship letter help your lender determine if your situation warrants the short sale.
David Welch Real Estate Optimist, Orlando Real Estate