The short sale process can vary, but it generally works as follows:
1) The lender is contacted to discuss the possibility of a short sale and to determine the lender's process for completing
2) The seller issues a letter authorizing the real estate agent to act on their behalf with the lender
3) The seller will complete a “hardship letter,” which will detail and explain all financial difficulties.
Lenders will usually want to validate the seller's financial situation by looking at bank statements, investment accounts, examining pay stubs and other financial records.
Documents Required to Process a Short Sale:
Tax Returns (Last 2 Years, First 3 pages)
W-2's (Last 2 Years)
Pay Stubs (2 Most Recent)
Bank Statements (2 Most recent months)
Lender Statement/Mortgage Statement
Authorization to Release Information
4) The lender will then request a third party price opinion.
5) The lender will then want to scrutinize the purchase agreement to determine if all amounts are reasonable and the real estate commission is acceptable.
Because of the documentation required, the short sale process can be lengthy. But if done correctly, it can work well for all parties involved. The lender avoids the uncertainty of the foreclosure process, the seller avoids a foreclosure on his or her credit report (along with potential bankruptcy), and the buyer hopefully got a good deal on a property.
For a more details on the short sale process please contact our office to speak with a Short Sale & Foreclosure Resource certified agent at (256) 489-2602.