Short Sales Seem to be Everywhere

I showed a nice home several weeks ago to a friend – great floorplan and location, but the steps off the back deck were just too much.  The steps would’ve been acceptable had they build 10, then a platform and turn, then the final 10.  I just noticed this evening that the home has now gone into the “short sale” mode – that when the sellers do find a buyer, the mortgage company is expecting there won’t be enough money to completely pay off the existing mortgage.

This happens when home values plunge as we’ve seen these last few months.  This is also the reason I’ve encouraged people to just stay put if they can to ride out the market correction.

Meanwhile, I just picked up a follower on Twitter – an agent from Arizona named James Wexler (aka Wexzilla).  I went to his site and found a really helpful post about what is required for a lender to accept a short sale. 

1. Hardship Letter – bank will want to know why you can no longer afford to make your monthly payment; just because your house is worth less from drop in market will not be sufficient.
2. Most recent tax return
3. Last 2 months bank statements
4. Last 2 Pay stubs
5. Monthly Expense sheet
6. Asset statement including, IRA, Life Insurance, stocks and Bonds, savings accounts and other home equity lines
7. CMA of property (price comparison of market value)
8. MLS Listing
9. Offer/Counter-Offer if applicable
10. Estimated Net sheet – title company can help get this so the bank will know exactly what they will receive from a sale net of costs/fees/etc.

I’ve listed and sold one short sale and this list is accurate.  While it was a relief for my seller to get out of the house, it was a fairly painful process for the family.  In the end the mortgage company allowed the seller to walk away with $1,000.  I thought that act of compassion by the lender was incredible.