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David Monroe

Do You Qualify For A Short Sale

Man Chained To HouseDo you qualify for a short sale? You may have determined that you wouldn’t be able to sell your house for a high enough price to pay off the existing mortgage(s), and you’re now considering a short sale. You may be in foreclosure or just one or two payments behind, or maybe you’re current on your mortgage but unable to continue making the payments. You know you will not be able to stay in the home and you need to get out from under the debt.

First, make sure you know all of your options for avoiding foreclosure. I recommend downloading the special report, 8 Ways to Avoid or Stop Foreclosure, if you haven’t reviewed all of your options.

Doing a short sale will take some work and cooperation on your part, even if you use a professional to assist you.  However, the benefits of a successful short sale compared to foreclosure are significant enough that it should be well worth the effort.

Here are some questions to ask yourself (and be honest):
  1. Do you have a legitimate hardship that prevents you (or will soon prevent you) from being able to pay your mortgage? Valid hardships include out-of-area job relocation, job loss, pay cut or other income reduction, divorce, significant home repairs needed that you can’t afford, and sudden increase in monthly expenses. There are other acceptable hardships as well, but you will need to be able to demonstrate to the bank that you cannot afford the house.
  2. Is your hardship short-term or long-term? If your hardship is short-term (maybe you lost your job, but you were able to regain similar employment a few months later), the bank may require that you attempt a loan modification or other workout plan first.
  3. Can you produce two months of bank statements, two years of tax returns, two months of pay stubs, a personal financial statement (a list of what you own, what you owe, your income and expenses), and write a hardship letter when you put your house on the market? This could take a couple hours or more depending on how organized you are.
  4. Are you willing to review and accept a reasonable offer on your property within 24-48 hours of receiving it?
  5. If you’re still occupying the house, are you willing to allow the property to be shown at all reasonable times?
  6. Are you willing to do some basic things to help your house sell, like clean the house, de-clutter, and clean up the yard? If a buyer expects a significant discount just because the house is a mess, the bank may think they can better mitigate their losses by foreclosing, cleaning up the property, and selling it at a higher price as a bank-owned property.
  7. Have you filed bankruptcy? If so, you’ll need to ask your bankruptcy attorney if it would be helpful sell the house in a short sale.
If your hardship is caused by you moving out of the area, the bank usually will not consider it a hardship until after you have moved. If you’re being relocated in two months, the bank may not look at your situation as being a hardship now.
Published Saturday, February 6, 2010 4:08 PM by David Monroe
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February 19, 2018 3:32 AM

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