Denver Short Sale Strategies
Why Would a Financial Institution Accept a Short Sale?
Financial institutions are far more eager to perform a short sale rather than a foreclosure. Foreclosures require financial institutions to take over the Denver home owner's property when they have fallen behind in their mortgage. Foreclosures tend be a lengthy process and are on the expensive side. A short sale is beneficial to both the Denver home owner and the financial institution. This allows the owner to free themselves from their mortgage and revive their credit history and allows the bank the option to sell the property in a quick manner without putting forth the time and money in a foreclosure.
Short sales have grown over the recent years; therefore Urban Synergy has come up with a process to help conduct the short sales in a timely manner. Our company wants to make this process as fast and smooth as possible and give you every opportunity to not have your Denver real estate go through the foreclosure process.
I am a Denver real estate agent and in no way am I a lawyer or a CPA. Therefore, I am unable to advise sellers on the consequences of their foreclosed Denver home. The IRS does bare the right to debt forgiveness as income to the Denver home owner and the financial institution may pursue a borrower for the difference of the amount owed and paid. Sellers must contact a professional lawyer to determine whether or not their loan qualifies for a deficiency judgment or claim. Urban Synergy is here to help with the real estate part of a short sale and not the legal aspect or judgments.
There are many steps and requirements that a borrower must take regarding a short sale. There is a vast amount of documentation that is required with short sales as well; however the following process will help Denver home owners to better understand the process of a short sale:
Communicate with the Lender
Finding the right person to handle short sales can be tedious and may require an abundance of phone calls, but it is very important that home owners find the right person in order to conduct a short sale. It is wise not to talk the "real estate short sale" or "work out" department. It is advisable to talk to the supervisor or the person who is responsible for making short-sale decisions.
Submit the Letter of Authorization
Written authorization is required in order to release any of the seller's personal information. It is best that sellers conducting business with a real estate agent, closing agent, Title Company or lawyer write a letter to the lenders, which will give them permission to talk with potential buyers about the loan. The letter should include the following:
~ The Properties Address
~ The Sellers Loan Reference Number
~ Sellers Name
~ The Current Date
~ The Sellers Agent's Name & Contact Information
Preliminary Net Sheet
This closing statement is estimated and will show the sales price that the seller plans to receive and the costs of the sale. Also shown are the unpaid loan balances, outstanding payments that may be due and the accrued late fees. This estimated bill is just that, an estimate and keep in mind; it will include any real estate commissions as well. More than likely the seller's Denver real estate agent will prepare this document for. Normally, if there is a cash amount due to the seller, a short sale will not be required.
Hardship Letter
It is best to make this letter as depressing as possible. This statement will describe to the financial institution how the seller managed to end up in the current financial position. It is basically making a plea to the institution to accept a lesser full payment than what is owed. Many lenders understand the difficulties life may bring such as, the loss of a job or an illness. What lenders will not be sensitive to is criminal or untruthful behavior.
Proof of Income and Assets
Lenders are required to be privy of any savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value, in order to assure the lender that the seller has no means to pay their debt. Honesty is the best policy in this situation and will help the seller get out of the financial situation in a much faster way than concealing this information from the lender.
Copies of the Bank Statements
Lenders must review the sellers' bank statements in order to reflect unaccountable deposits and large cash withdrawals. If there is an unusual amount of checks used, the lender will more than likely make note of this as well. Making a list of these items and explaining the reason behind them ahead of time proves to be very beneficial. It is also a good idea to have every deposit available to the lender, so that he can notate them and any other deposits that may be expected.
Comparative Market Analysis
A Denver Realtor can prepare what is called a CMA for the seller that will show the current market value of their property. When the market declines, so does the property value. It is best to determine this and be able to present this information to the lender. The CMA consists of the following: active on the market, Pending sales and the price of houses sold in the past six years. This is helpful in producing the best price for the property.
Purchase Agreement and Listing Agreement
The lender will want to obtain a copy of the agreement that is made between the sellers and a potential Denver Home buyer. Sellers will also need to provide the seller with a copy of the listing agreement as well. Commissions are often restructured and items such as home protection plans and termite inspections will not be covered.
After completing all of these steps successfully, the Denver short sale will be victorious. Another option for the seller is to ask the lender not to report any negative issues to the credit bureau; however lenders are not obligated in any manner to do so.
