The key to a successful short sale is the ability to show the lender a reasonable offer from a prospective buyer. That means the property must be priced at market value-even if it’s below the balance due on the loan.
If you believe you might be a candidate for a short sale, it’s a good idea to ask an experienced Realtor, title company or short sales specialist whether they can help. Any realty commission, for example, can be negotiated with the lender.
Derek Kirk, chief financial officer for Sacramento’s AMC Realty, said he has seen lenders jammed with requests from people who are merely equity-drained but not facing hardship.
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“Short sales are for a certain niche of people,” said Kirk. “You actually have to hand the lender a full financial package showing the hardship. People seeking short sales without hardship are clogging the system.”
Any negotiations should deal with how the lender will report the transaction to the credit bureau: whether it’s reported as a debt satisfied or a debt settled for less than the full amount.
It doesn’t hurt to ask for a letter stating the mortgage was “paid as agreed” and promising that nothing negative about the homeowners’ credit will be reported, according to Jeff Jensen, author of “How To Fight Foreclosure and Win With Honor.”
Generally, said Jensen, the cleaner the title and the closer to market value the loan amount, the more apt the bank is to negotiate.
“The main reason lenders will go along with the short pay (sale) is because the homeowner finds the buyer and helps facilitate the sale,” said Jensen. “Otherwise, what’s the other avenue?”