Minnesota Short Sale Expert

Short Sales Explained

Although the phrase “short sale” is starting to become more and more common in today’s vocabulary for many people I am still getting this same question over and over…What is a short sale..?? Many have heard of it but simply do not understand how the process works and others simply have never heard the term yet. Surprising but true.

A short sale is a phrase used to describe a sale where the cost of the product (in this case the property) is actually more than the sales price. In real estate a short sale can be a rather lengthy process in which an agreement is made between the lender and the seller where the lender will accept a lesser amount than is owed. There are a few typical steps involved with a short sale as follows:

• The seller of the property needs to be in a distressed state which in most cases means that there is a financial hardship that has occurred. Many times the property is in foreclosure at this point. If the seller is NOT behind on their mortgage payments the lenders will not always approve a short sale. They look at this as being a “performing” loan. However, recently the lenders are even starting to consider these performing loans for short sales.

• A lengthy package of documents needs to be assembled by the real estate agent to prove to the bank that the seller no longer has the ability to make the payments. Most of these same documents wil be ones that you actually used to qualify for the loan. In addition to the financial documents a hardship letter needs to be drafted explaining the causes of the financial hardship. Also market trends, statistics, listing history, recent sales and other information gets sent along to the bank to help the lender make a more accurate determination as to why they should accept a short sale.

• The property would then be listed for sale on the MLS and proceed as a normal sale with the exception that the offer would need to have the lender’s approval before being finalized.

This gives just an overview explaining a short sale as well as the process that a seller can go through to determine whether a short sale makes sense or not given their situation. If you or anyone you know is having difficulty with paying their mortgage please feel free to contact me directly through this site and I would be happy to answer any and all questions to see if a short sale is the best option. I can be reached on my private line at 763-242-6303 or rob@mnrealestateteam.com.

                                           “Specializing in helping families avoid foreclosure”