FREQUENTLY ASKED QUESTIONS ABOUT LAS VEGAS SHORT SALE
Answers to questions a Las Vegas homeowner may have about a Las Vegas short sale.
What is a Short Sale?
This term refers to a transaction in which the sales price will not generate enough money to cover the payoff of the seller’s existing loan including closing costs. Working with a willing lender, a seller may be able to negotiate a payoff amount which is less than the actual amount that would ordinarily be required to pay off the loan. The lender agrees to accept the equity available in the property, and the Seller receives no proceeds from the sale of the property.
Why would a seller or lender find a short sale appealing?
Las Vegas homeowners benefit by avoiding the long-term negative consequences to their credit which are associated with a foreclosure. Lenders benefit because they can avoid the substantial expense of a foreclosure proceeding. Most lenders do not want to own the properties used as collateral for their loans, because the maintenance cost and taxes add to their cost and decrease profitability.
What are the first steps?
The lender and Las Vegas seller should start by having an extensive, truthful discussion about the seller’s financial status. People who are in financial trouble may be hesitant to discuss the details of their unfavorable situation, but honesty and full disclosure are essential to the successful closing of a short sale transaction. The seller should contact the lender to find out whether the lender is willing to consider a short payoff arrangement. The process of convincing a lender to reduce its loan balance to close the transaction is often challenging, requiring the negotiating skills of a seasoned agent. Be mindful of the additional work that short sales require of the both the agent and the seller.
Working with the Lender
Determine the lenders guidelines. You can anticipate a very specific list of required documentation that begins with a copy of the Listing Agreement or some other form of written authorization from the seller. Additional requirements include:
- Strong evidence of financial hardship to the lender
- Pay stubs or other proof of current income flow
- 2 years of Tax Returns signed or explanation letter
- Latest personal checking account statement
- Copies of all past due secured and unsecured debt notices
- Copies of the latest mortgage statement
- Copy of the current tax bill
- Copy of the purchase agreement
- Profit and Loss Statement – Self employed
- Third Party Authorization
- Hardship Letter