Doing a Short Sale? Start Digging Through Your File Cabinet Now

It is no secret the market in the Modesto and Central Valley area is flooded with short sale listings, and there is not an end in sight- at least any time soon. If you are considering a short sale it is important that you separate yourself from the rest of the sellers and show your buyer (and their agent) that you are a motivated seller who is taking the necessary steps to close the transaction in a timely manner.

A successful short sale requires a partnership between the seller and listing agent. Both need to be fully committed to provide everything the lender requests to successfully close the transaction. Many sellers do not realize they need to be much more involved than simply accepting an offer.

As the seller doing some preliminary gathering will help expedite the process, so I recommend doing as much of it as possible before your lender has a chance to ask for it. The extent of the documents required varies from lender to lender, but here is a list of things you may need to provide to get an approved short sale.

• Pay stubs- they will want to see recent pay stubs for all borrowers/owners and often they will require you to send updated ones as the process continues

• Bank statements- most recent for checking and savings accounts, all pages

• Tax returns- two most recent years with w-2s and all schedules

• Profit and loss statements- if you are self-employed you will need to submit a P&L

• Hardship letter- a letter to your bank explaining why you need to be granted a short sale

• Divorce related documents- if you divorced since you took out the loan on the property and are using divorce as your hardship, they will want a copy of your divorce decree.

• Grant deeds- often related to divorce, if one of the original borrowers is no longer on title but still on the loan they will likely want to see a copy of the grant deed in addition to the divorce decree.

• Income- if you have other income besides your job you will have to disclose that- rental income, alimony, child support, unemployment, disability, etc.

• Debts and liabilities- they will often ask how much you spend (monthly) on everything from daycare to cable, including car payments, credit card payments, food and leisure and alimony/child support. They use all these numbers to calculate your debt to income ratio.

• Assets- they will ask how much you have in savings, 401(K) and IRA accounts. They will ask about other real estate you own and how much is owed on it relative to it’s value and personal property such as vehicles, boats, RVs, etc.

• Rental agreements- if you own rental property they will want to verify your rental income with copies of your rental agreements with your tenants.

Short sales are definitely not easy, and can often be emotional for the seller. With some organization and the right agent on your side to walk you through the process you can get through it successfully with as little frustration as possible. If you are considering a short sale and have more detailed questions please do not hesitate to contact me HERE. Your trust is valuable to me so your information and situation is always held in the strictest confidence.