How to short sale your property

By Kim Smith

When you sell property and the outstanding loan on the property exceeds the market value of the property, it is called a short sale. It is a viable solution for a property owner who can no longer afford to pay the loan and wants to avoid foreclosure and maintain his or her credit rating. Not all lenders will accept a short sale, so you need to arm yourself with the enough information if you are considering a short sale. If you find yourself in this situation, here are a few steps to follow.

Determine the dollar value loss of the short sale. Have a realtor assess the value of your property. Request that he or she performs a Comparative Market Analysis to confirm the value. Then, determine the costs associated with selling the property. Include everything from advertising to legal costs. If you have any loans against the property, add those up. Subtract all loans and costs from the value of the property. This is the number the lender will use when determining whether or not to accept the offer.

Find an accountant. Believe it or not, the IRS may consider the short sale income. Find an accountant and ask for advice. You will need to know what lies ahead for you.

Prove your hardship. You will have to provide documentation detailing why you cannot pay on your mortgage. In order for a lender to even consider your request, they will need to determine if you incapable of paying off your debt yourself. You must be careful here. If it is determined that you were unable to pay this loan before you initially accepted it, it may lead to legal troubles.

Find a buyer. You will have to have a buyer for your property in order to proceed. The buyer will pay off the accepted loan value, if the lender is agreeable to the deal. Set up a viable contract between yourself and your buyer. Check with a lawyer or broker for help.

Find a lender. This is the hardest part of the deal, finding a lender who will agree to the short sale. After you've armed yourself with the numbers, advice from your accountant, your hardship papers, and your buyer, it's time to contact the lenders. You may get lots of rejections before you find a lender, so keep trying.

Make the sale. Now that everything is in place, you can make your sale. If you have all your ducks in a row, this should be smooth.

Short sales benefit the owner, buyer, and lender. If you arm yourself with the right information and are prepared, you can make a short sale on your property and move forward with your life. The buyer will receive new property at a discount. A great advantage whether they choose to purchase for investment purposes or if they choose to keep the property. The lender gets to avoid foreclosure and the associated costs. For more information on the short sale process, please visit: http://www.shortsalesincome.com

About the Author

Kim Smith http://www.shortsalesincome.com

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