Cape Coral Florida's Real Estate Guide

A short sale occurs when the lender on a mortgage agrees to accept less than the amount owed on the mortgage as payment in full and the home is then sold for a reduced price. Banks and other home loan companies try to avoid short sales as they are a guaranteed loss for the company. However, in order to avoid even costlier foreclosure proceedings, there are circumstances under which banks and loan companies will agree to a short sale. Ask yourself the following four questions to see if you meet the requirements to sell your home via a short sale:

Has Your Home's Market Value Dropped Substantially?

Hard comparable sales must substantiate that the home is worth less than the unpaid balance due your lender. This unpaid balance may include a prepayment penalty.

Is The Mortgage In Or Near Default Status?

It used to be that lenders would not consider a short sale if the payments were current, but that is no longer the case. Realizing that other factors contribute to a potential default, many lenders are eager to head off future problems at the pass.

Have You Recently Fallen On Hard Times?

You must submit a letter of hardship that explains why you can not pay the difference due upon sale, including why you have or will stop making the monthly payments. Keep in mind that circumstances such as bad purchase decisions, being unhappy with your neighbors, buying another home, pregnancy, and moving to an apartment do NOT qualify as hardships.

Examples of hardship are unemployment, divorce, medical emergency/sudden illness, bankruptcy, or death.

Do You Have Any Substantial Assets?

Your lender will probably want to see a copy of your tax returns and/or a financial statement. If your lender discovers assets, your lender may not grant the short sale because your lender will feel that you have the ability to pay the shorted difference. Sellers with assets may still be granted a short sale but could be required to pay back the shortfall.

For example, if you have cash in a savings account, own other real estate, stocks, bonds or even IRA accounts, your lender will most likely determine that you have assets. However, your lender might discount the amount that you are required to pay back.