For most homeowners, losing their house in a foreclosure is one of the worst things that can happen, throwing the family – and family finances – into chaos. A short sale can help you avoid foreclosure and is an invaluable option if you are delinquent on your mortgage. For a short sale to be successful, however, you must stay in close contact and cooperate with your realtor throughout every step of the process.
During a short sale, the seller is expected to provide various documents to the realtor to give to the lender. For example, the lender may ask for updated financials every month while the short sale negotiations are in process. The homeowner will need to provide bank statements, pay stubs, and any other relevant documents to keep the short sale moving forward. The bank will also give a deadline by which the documents must be delivered, which is generally 72 hours. If the homeowner does not meet the deadline, the bank may shut off the short sale.
This was the case with a client for whom we tried to arrange a short sale over the holidays. Although we had found a buyer and the preliminary negotiations with the lender went smoothly, the homeowner failed to respond to requests from the bank for updated financial records. Because the seller did not provide the documents by the deadline, the bank cancelled the short sale. As a result, the homeowners were faced with the prospect of foreclosure during what should have been a joyful season.
Sadly, another client had a similar experience last month because of their failure to cooperate with the short sale process. We found a buyer, who submitted a contract to purchase the home; however, the sellers didn’t respond. All they needed to do was sign the contract, which in this case even could have been done electronically over email. When we urged them to take action, they said it was the holidays and they didn’t want to deal with the short sale until after the holidays. Two weeks later, the buyers pulled out, and the sellers lost the opportunity to short sell the house. Now they have to find a new buyer.
Being unresponsive or uncooperative can really derail a short sale and cause your home to go into foreclosure. The short sale process can take several months, during which time deadlines from both the bank and the buyers have to be met. The short sale realtor will manage getting the required documents to the lender and all other aspects of the negotiations, but as a homeowner you need to provide any requested financials and signatures to keep the short sale moving forward.
If we can answer any questions about the short sale process, or if you are behind on your mortgage and want to arrange a short sale of your home, please give us a call.