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You should consult an attorney for advice regarding your individual situation.
Contacting an attorney does not create an attorney-client relationship. Do not send,
e-mail, or provide confidential information or information you do not wish to be
publicly disseminated until such time as an attorney-client relationship has been
established and requested to do so by an attorney.
Copyright 2009 Law Office of Craig W. Little, P.A. All rights reserved. You may
reproduce portions of this site or materials available at this site for personal and
non-commercial use. All copies of portions of this site or materials available at this
site must include this copyright statement.
Web Articles
Analysis of Short Sales of
Residential or Commercial Property
Seller's Considerations
Seller's Submittal Package
Once a seller has received an offer to purchase the short sale
property and they have accepted it, the offer is submitted to the
seller’s lender along with documentation and information related
to the seller and the property.
Lenders have different lists of information and documents that
they require be submitted before they will begin to review an
offer for a short sale, therefore the lender should be contacted
early to determine what they will require to allow the seller time
to compile the documents and information. But the following is a
list of documents and information that lenders will generally
require:
- A Hardship Letter: This is a statement of the facts that have
led to the seller’s financial situation and why the seller is unable
to repay the loan on the property. Circumstances beyond the
control of the lender, such as medical hardship, loss of job,
divorce, or unavoidable expenses will support an approval of
the seller by the lender. Extravagant purchases, overextending
credit, excessive loans secured by the property, or criminal
behavior will be viewed unfavorably by lenders.
- Seller’s Financial Statements and Proof of Income and Assets:
If the seller has sufficient income to continue to make the
payments on the loan, the lender is unlikely to approve them for
a short sale. And if the seller has other assets that can be
liquidated then again, the lender is unlikely to approve them for
a short sale.
- Copies of the Seller’s Bank Statements: Lenders will examine
withdrawals and expenditures to ensure that the seller is not
hiding assets or cash and they will examine deposits to
determine the likelihood that those deposits might continue.
- Sellers Tax returns and W-2s.
- The Purchase Agreement: Lenders want to review the
agreement by which the property would be sold to the buyer if
the short sale is approved. The lender may even renegotiate
terms of the purchase agreement.
- A Preliminary Sale Proceeds Analysis: This estimates closing
costs and what the lender can expect to receive from the short
sale.
- A Comparative Market Analysis: While the lender will probably
obtain their own analysis or appraisal they sometimes want the
seller to submit one as a base to begin their analysis of the
offer. And even if the lender does not request the seller submit
a comparative market analysis, this is where the seller can
attempt to justify the offer by highlighting unusual circumstances
inherent in the property and necessary repairs that will have to
be undertaken on the property that place the true market value
of the property inline with the offer to purchase the property that
has been submitted to the lender.
- Letter of Authorization: This authorizes the lender to discuss
the seller’s file with the seller’s agent or attorney. The letter of
authorization usually includes the property address, the loan
number, name of debtor/seller, the agent’s and/or attorney’s
name and contact information, and a statement that the lender
can discuss this file with that agent and/or attorney.
- A Copy of the Buyer’s Pre-Approval Letter for Their Financing:
While it may not necessarily be required by the seller’s lender, if
the proposed transaction is not a cash deal then submitting a
copy of the buyer’s pre-approval letter for their financing will
make the submittal package stronger for the lender.
If an incomplete package is submitted to the lender, their
response will be delayed. And even if a complete package is
submitted to the lender, it may take time to get a response. The
seller’s agent or attorney must be prepared to continually follow-
up on the file with the lender.
Return to Seller's Short Sale Considerations
Residential or Commercial Property
Seller's Considerations
Seller's Submittal Package
Once a seller has received an offer to purchase the short sale
property and they have accepted it, the offer is submitted to the
seller’s lender along with documentation and information related
to the seller and the property.
Lenders have different lists of information and documents that
they require be submitted before they will begin to review an
offer for a short sale, therefore the lender should be contacted
early to determine what they will require to allow the seller time
to compile the documents and information. But the following is a
list of documents and information that lenders will generally
require:
- A Hardship Letter: This is a statement of the facts that have
led to the seller’s financial situation and why the seller is unable
to repay the loan on the property. Circumstances beyond the
control of the lender, such as medical hardship, loss of job,
divorce, or unavoidable expenses will support an approval of
the seller by the lender. Extravagant purchases, overextending
credit, excessive loans secured by the property, or criminal
behavior will be viewed unfavorably by lenders.
- Seller’s Financial Statements and Proof of Income and Assets:
If the seller has sufficient income to continue to make the
payments on the loan, the lender is unlikely to approve them for
a short sale. And if the seller has other assets that can be
liquidated then again, the lender is unlikely to approve them for
a short sale.
- Copies of the Seller’s Bank Statements: Lenders will examine
withdrawals and expenditures to ensure that the seller is not
hiding assets or cash and they will examine deposits to
determine the likelihood that those deposits might continue.
- Sellers Tax returns and W-2s.
- The Purchase Agreement: Lenders want to review the
agreement by which the property would be sold to the buyer if
the short sale is approved. The lender may even renegotiate
terms of the purchase agreement.
- A Preliminary Sale Proceeds Analysis: This estimates closing
costs and what the lender can expect to receive from the short
sale.
- A Comparative Market Analysis: While the lender will probably
obtain their own analysis or appraisal they sometimes want the
seller to submit one as a base to begin their analysis of the
offer. And even if the lender does not request the seller submit
a comparative market analysis, this is where the seller can
attempt to justify the offer by highlighting unusual circumstances
inherent in the property and necessary repairs that will have to
be undertaken on the property that place the true market value
of the property inline with the offer to purchase the property that
has been submitted to the lender.
- Letter of Authorization: This authorizes the lender to discuss
the seller’s file with the seller’s agent or attorney. The letter of
authorization usually includes the property address, the loan
number, name of debtor/seller, the agent’s and/or attorney’s
name and contact information, and a statement that the lender
can discuss this file with that agent and/or attorney.
- A Copy of the Buyer’s Pre-Approval Letter for Their Financing:
While it may not necessarily be required by the seller’s lender, if
the proposed transaction is not a cash deal then submitting a
copy of the buyer’s pre-approval letter for their financing will
make the submittal package stronger for the lender.
If an incomplete package is submitted to the lender, their
response will be delayed. And even if a complete package is
submitted to the lender, it may take time to get a response. The
seller’s agent or attorney must be prepared to continually follow-
up on the file with the lender.
Return to Seller's Short Sale Considerations
Law Office of
Craig W. Little, P.A.