A short sale is the process of selling your home for less than what you owe on the mortgage. This process is generally undertaken by a homeowner who can no longer make his mortgage payments. Sometimes confused as an alternative to foreclosure, a short sale can have the same negative effect on your credit score as a foreclosure, and even a bankruptcy. If you have decided to short sell your house, it's best to take action immediately.
Hire A Real Estate Agent
Talk to friends, neighbors and family members to see if they know of anyone that has sold their house using the short sale process and try to contact that agent. The agent will be dealing directly with your mortgage company, pleading your case to them, so it's important to hire an experienced short sales agent.
Writing a Hardship Letter
The bank wants to know why you can no longer make your mortgage payments. Your hardship letter answers this question and it can make or break your ability to pursue a short sale of your home. Suitable reasons include death, divorce, illness, job loss and job transfer. Pregnancy or other additions to the size of your family is not a suitable reason, nor is a return to college or being broke after a large purchase. You will need to explain, in detail, why you can no longer make your payments. It does not need to be a long letter. Simply outline your current financial circumstances and how they came about.
Gather Documents
Your real estate agent will put together a "short sale package" for the lender. This will include your hardship letter and certain documents your agent will have you sign. These documents will vary depending upon the type of loan that you have, for instance, an FHA loan will require different documents than a VA loan. You will also need to include your financial information. Gather two years of W2's, the past two month's pay stubs, your last two bank statements, and all of your loan papers from both your first and, if applicable, second loans. If you have a Homeowner's Association, you will also need any liens or statements from them. A good short sale real estate agent will have a list of documents that she will need for the package.
