What to Expect When Selling Your Home as a Short Sale What is a short sale? When the value of your home is less than the total balance due to the lenders that hold liens against your home. The lender(s) that will not be paid in full from the proceeds of the sale of your home must agree to allow you to sell your home and agree to the amount that they will be “shorted”.
Why would a lender agree to do this? In most cases, your lender(s) will lose more money in a foreclosure than in a short sale.
Who will pay my closing costs? In most cases, the lender will pay a majority of the closing costs on your behalf. The amount of closing costs that the lender pays, plus the “shorted” amount of the lien equals the total loss to the lender.
Are there costs that the lender will not pay on my behalf? The lender may or may not pay delinquent HOA fees, or may only pay a portion of those fees. You may be required to pay these fees. In addition, excessive seller concessions to the buyer may not be paid on your behalf. The lender does not pay for any repairs needed to the property. Lastly, the lender will not pay for any personal liens or judgments on your behalf such as IRS liens.
How long will the lender(s) take to approve my short sale? The lenders will review your financial documents (income, asset statements), your hardship letter, your contract of sale, and the settlement statement (HUD 1) which outlines the closing costs for the lender to pay on your behalf. The entire review process generally takes at least 60 days, however some lenders can take as long as 120 days. If you have two liens against your property, the process will be longer than if you have one lien. If you have a government insured loan (FHA, VA), the process is longer than if you had a conventional loan. For a list of documents that you will need to submit, visit our website at www.PlatinumGroupServices.com.
What decision can I expect from the lender? The lender will either approve the short sale, counter the short sale, or deny the short sale. A counter indicates that the lender needs the buyer to increase their offer price in order to approve the short sale. A denial indicates that the lender feels the buyer’s offer price is too far below what the lender feels the fair market value of the property is, or they don’t feel that you, as a seller, have a true hardship that prevents you from making your mortgage payments. Keep in mind, you will not be obligated to accept the lender’s approval if the terms of the approval are not agreeable to you.
What type of hardships does the lender look for when making a decision? A hardship can include unemployment, under-employment, divorce, death of a wage earner, medical crisis, relocation etc. In addition, the lender reviews the asset profile of a seller to determine if the seller has the funds to pay the mortgage or pay the amount the lender is shorted.
Will the lender forgive the amount of their loss? The lender can forgive the amount of their loss, they can require you to sign a promissory note at settlement, they can file a deficiency judgment against you at a later date, or they can require a seller contribution at settlement. The factors that determine this outcome are the investor’s guideline, the amount of the lender’s loss, and/or the seller’s financial profile.
IMPORTANT NOTICE: You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender (or servicer). If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay for our services. Platinum Group Services and the Real Estate Company that you are working with have a signed Short Sale Negotiation Real Estate Company Agreement that outlines the fee schedule in consideration of our efforts to negotiate short sales on behalf of clients and agents for said Real Estate Company. Platinum Group Services is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not to agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.