A short sale can be a good way to settle your mortgage obligation while avoiding foreclosure. However, it’s essential to be aware of any challenges that could delay or impede the process to better prepare yourself. Look below to explore the most common obstacles when attempting to do a short sale.
Convincing Your Lender to Accept a Short Sale
The first and most challenging step in the short sale process is convincing your lender to approve it in the first place. Lenders, understandably, want to recoup their entire loan amount, so they will be hesitant to agree to sell a property for less than what you owe. However, these institutions also want to avoid foreclosure whenever possible, so they’re willing to work with you to produce alternative solutions.
Partnering with an intermediary can help you assess all the variables the lender will examine before approving the short sale. These variables may include your financial difficulties, your assets and income, the evaluated worth of your house, and the reasonableness of any prospective offers. Then you’ll try to persuade the lender to agree to a short sale by presenting the short sale package in the best possible light.
Even if the lender agrees to waive your mortgage obligation in return for the short sale profits, you may still be personally liable for the debt. Across many states, the lender can pursue a deficiency judgment against you to collect the shortfall amount following the short sale. When your state doesn’t have a provision prohibiting the lender from obtaining a deficiency judgment after a short sale, you should negotiate for a waiver of the deficiency.
There’s a lot of paperwork involved throughout the short sale process. Issues with improper documentation can cause short sales to fall through. For example, paperwork may not be completed on time, may be missing, or may not be signed and dated appropriately.
Another incentive to work with a skilled intermediary is the amount of documentation involved. An experienced short sale expert will know which documents are necessary and be able to assist you in preparing them and submitting them to the appropriate parties.
It can feel like an uphill climb when facing some of the most common obstacles with short sales. Fortunately, Short Sale Cooperative’s experienced professionals can help you successfully navigate the short sale basicsso you can finish the process without any hassles. Feel free to contact us with any questions you may have.