Should All Short Sale Offers Be Presented to your Banking?

If a homeowner is unable to make payments on his mortgage loan because of financial hardship such as the loss of work, the mortgage lender gets the choice of allowing a brief sale. In a brief sale, the land is sold to a purchaser for less than the entire amount owed on the mortgage loan to avoid the procedure for foreclosure. In many cases, lenders may accept short-sale offers instead of foreclosing on the property if the brief sale will reduce the possible loss to the lender.

Short Sale Eligibility

Mortgage borrowers must first obtain approval from the lender and demonstrate the particulars of financial hardship according to guidelines provided by the lending company. The borrower must be in delinquent status on the loan. The lender determines what is considered delinquent status for the borrower to qualify for brief sale eligibility.

List Price

Once approved for a short sale, the homeowner may set the property available. The lender will obtain a property valuation to determine the minimum amount it will require for brief sale offers. The trade costs — such as property taxes, settlement charges, property transfer taxes and attorney fees — will be deducted from the sales price of the property during the closing process. On the other hand, the borrower and the borrower’s broker determine the list price for your property according to suggested list prices provided by the lending company.

Banking Agreement

The seller’s broker must present all brief sale provides into the mortgage lender or the lender’s broker. The seller may not accept an offer and proceed to the closing process prior to obtaining approval by the lending company. If there’s more than one lender, all lenders must approve the offer before the property is sold. If the purchaser intends to fund the purchase price of the house, most lenders will require the purchaser to acquire a pre-approval letter demonstrating that the purchaser will be approved for financing, if the deal is accepted by the lending company. Lenders typically accept the highest offer that is near the market value of the house.

Buy Agreement

After the lender approves a offer and issues an approval notice for the brief sale, the seller’s broker must negotiate the contract provisions with the purchaser’s broker and execute a sales agreement with the permission of the purchaser and seller. The agreement is submitted to the lender along with other required documents to enable the lender to proceed with the short-sale process, which generally takes approximately 60 to 90 days to close.

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