Qualifications for Selling your Spokane Home as a Short Sale
We talk to a lot of Spokane homeowners who have questions about selling their home and what it takes to do a "short sale". In order for your mortgage holder to approve a sale for less than what is owed, they will first try to determine if your situation fits their criteria.
If you can answer yes, yes, yes and no to the following questions, your lender will most likely cooperate with you on a short sale.
Has the Value of Your Home Has Dropped?
You must be able to show that your home is currently worth less than the unpaid balance you still owe on your mortgage. Spokane home values have been declining since the market peak in 2007, so many homeowners who purchased within the last 5-10 years without making a substantial downpayment are "under water". Even if your outstanding balance is close to or at the current market value, you will have additional costs to sell, which can put you at a net loss. We can provide you with a market analysis to determine your home’s current value as well as an estimate of your net gain or loss after all selling costs.
Are you behind on Your Mortgage Payments, or will you soon be?
In the past, lenders would not consider a short sale unless you were behind on your payments, but that is no longer always the case. If you can demonstrate that you have explored all other options and you will not be able to make the payments in the near future, some lenders may agree to work with you on a short sale.
Do you have a Financial Hardship?
You will be required to write a letter that explains why you are unable to pay the shortfall due upon the sale of your home, including why you have or will stop making your monthly payments. This is where you explain your unique circumstances, such as health conditions, job loss, death, or other factors that result in the loss of income.
Examples of hardship are:
To further document your current financial situation, you’ll be required to submit copies of your past two years tax returns, your most recent bank statements and current income/expense reports.
Do You Have Other Assets?
You must not have any assets that the lender can use to recover its losses. This could include cash in a savings account, stocks, IRA accounts, or other real estate that you own. If your lender discovers assets, they may deny the short sale because they believe you have the ability to pay the shortfall. In some cases, they may still grant the short sale but will require you to pay back some of the shorted difference.
These are the four basic requirements of any short sale, however each bank or lender is unique and may have their own criteria. If you have questions or are considering a Short Sale, we can help! We understand that the prospect of losing your home is extremely stressful, and a short sale may be an alternative to foreclosure. Through this process, we can help you exit your home with dignity, get a fresh start and avoid the stigma of a foreclosure on your credit record. Contact us today.
Darla and LeRoy Pilant are real estate brokers in Spokane, WA. Connect with them at TheRealEstateAces.com or SpokaneHomesforHeroes.com