While there are many good things to be said about real estate in Silicon Valley, the national downturn in the housing market has affected some homeowners in our area. As a Certified Distressed Property Expert, I understand the special challenges involved when the market value of a home will not cover the outstanding mortgage against it.
A homeowner who has a property with an “upside-down” value may mistakenly believe they cannot sell the home. Misinformation by the media and uninformed advice from well-meaning friends can compound the discouragement. Too often, a sense fear or frustration can cause a homeowner to abandon their property to the foreclosure process.
Having a Silicon Valley Real Estate agent on your side who is familiar with Short Sales can make all the difference. Here’s a basic rundown of what’s involved in the process.
First, there is no one-size-fits-all. Every mortgage loan has different guidelines set by the respective bank, investor pool, and mortgage insurer. These include specific documentation requirements. Good communication is critical in the short sale process, as many points of contact may be involved.
The next step is determining what your home is worth on today’s market. A REALTOR® with distressed property experience is best equipped to make market value comparisons.
Your property will then be listed for sale with the full-service, professional marketing you can expect from an experienced Silicon Valley Real Estate agent.
When an Offer to Purchase is obtained from a qualified buyer, the offer will be submitted to the bank, along with specific information from you, and a letter that explains your hardship. This is the most detailed part of the process.
What qualifies as a hardship may vary by the bank involved. Generally, hardships are recognized as follows:
- Permanent reduction of income
- Unemployment
- Divorce
- Death of borrower/co-borrower
- Permanent disability
- Involuntary job transfer
Additionally, your financial information must show that you do not have the ability to cover the difference between the selling price of the property and the mortgage balance. It must also show that you cannot maintain the mortgage payments going forward.
To prove your financial picture, the bank will ask for the following documentation:
- Bank statements for checking, savings, and investment accounts
- Disclosure of debts and expenses
- Income tax returns for the past two years
- Paycheck stubs/proof of direct deposits
- Proof of adverse circumstance – divorce decree, job loss, ect.
- Your credit report may be pulled by the bank
Your bank may ask for other information specific to your circumstances. The clock is ticking during the short sale process, and any time the bank makes a request for information, a prompt reply is necessary. Again, good communication is critical. Working with a professional Silicon Valley Real Estate agent who understands the process, and your personal needs, will give you the best chance for success.
Short Sales are complex but they are not impossible. Patience, experience, good communication and professionalism are traits of a good REALTOR® and they are especially important in the Short Sale transaction. If you have a Silicon Valley home that may need a Short Sale, please contact me for personal assistance.
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