How to be a good short sale Seller
July 24, 2012
Remember as child those long rides to a summer vacation destination in the back of the family car? They seemed interminable. Cries of “ Are we there yet?” echoed through the car. The process of reaching your destination appeared endless, and that can be what it feels like to be the Seller of a short sale property.
Despite what you read in the newspapers the processing of a short sale is still imperfect. Numerous variables to contend with and without proper management, frustrations may run high. However, here are a few things you can do to assist with the process and to avoid any additional issues or hurdles.
- Consult an attorney and/or tax professional for advice regarding your particular situation. Every short sale is different so you can’t assume yours will be the same as someone you know who went through one already.
- Most lenders require the same paperwork. Even before you have an offer, draft your hardship letter, gather tax returns, bank statements, pay stubs, etc., so you are prepared once an offer comes in to submit the package to the lender quickly.
- If you are represented by an attorney do not sign an offer until the attorney reviews it. Have your realtor include an attorney review period in the contract, typically three days.
- Provide the required documentation to whomever is negotiating your short sale with the lender as quickly as possible. It is not unusual for some time to pass and the lender to ask for additional paperwork. Addressing the request quickly helps to keep the attention on your file rather than the lender moving on to another one because you didn’t comply in a timely fashion.
- Keep the property in good repair. This includes keeping the lawn mowed and trees trimmed. If you live in a community governed by an Association they may have the right to come in and mow the lawn and bill you for it. Once your sale is approved the closing agent must obtain an estoppel letter to confirm payment of Association dues, fees, etc. The last thing you want is a large and unexpected bill on your hands that you are responsible for paying.
- If you live in a community that has an association continue to make payments for associations fees and dues. If you don’t the association may turn your unpaid account over to their attorney, which then results in late fees, interest, and attorneys’ fees and may result in the filing of a lien against the property. It can be difficult to get lender to absorb these fees as part of the transaction. You must convey a marketable title to the property per the contract, therefore all unpaid fees and liens must be settled at closing.
- Understand that the goal of whomever is negotiating your short sale is a successful conclusion. It’s important to have reasonable expectations about the process and realize that lenders are processing more short sales than they have people working on them. Although the process may seem illogical at times, working within the guidelines set by an individual lender is a must. Even if a request seems absurd or redundant, it’s imperative to cooperate in a timely fashion to ensure success.
- Recognize that you are still the owner of the property. Some Sellers consider the short sale property “the lender’s responsibility” – this is not the case. You are required to pay the taxes, keep the property insured, and keep the property in good repair.
- Be available! Whomever is negotiations your short sale needs to be able to reach you. Keep your negotiator in the loop about travel plans or other absences. Sometimes action is required very quickly and lack of response can endanger the transaction. If you’re going to be away for any length of time, particularly around the time of the closing, inquire about the use of a Power of Attorney. Most lenders will permit the use of a Power of Attorney, however, most require approval of the document in advance.
- Lastly, patience, patience, patience. Although the use of a qualified short sale negotiator may expedite the process – it still takes time. The lender will review the file and make a decision, but ultimately there is a process in place and what that process requires is time.
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