Short Sale Steps
Mark isn't sure how to do a short sale. He is sure, though, after talking to Dave.
QUESTION: Mark asks the process for doing a short sale and how he starts to do so. Dave walks him through it.
ANSWER: Different companies want you to do different things. What is a short sale? It is when you sell a house short of what it takes to pay off the mortgage. The mortgage company agrees to accept the lower amount. For example, if you sell a house with a $300,000 mortgage for $250,000, the mortgage company takes a $50,000 hit.
Why would they do that? Because the mortgage company becomes convinced, from the information they request from you, that there is a very slow market in your area and that is all your house will bring. They get that information from your real estate agent going into the multiple listing service (MLS) stats and finding how many homes in your neighborhood have sold in the last 12 months and give some pricing information.
Once the mortgage company has seen that proof, they would accept an offer from a buyer. If someone offered you $250,000, you send the mortgage company that contract with the statistical evidence that the house will only bring that much, so get it while you can.
The mortgage company will accept the lower amount as settlement for the mortgage. Get all of that in writing so they can’t chase you for the difference later on. Some companies won’t accept a short sale because they think if you have enough money to pay the payment, then you have enough money.