Recently, we had a client that wanted to sell an investment property as a "Short Sale" due to a financial hardship and significant loss of income.  This is a very common scenario in our Central Florida market.  They had several properties throughout the region and were familiar with the process and documentation required.  

In this case, we listed the property for sale after determining the current market value.  We studied the comparable active listings and the comparable sales that have closed in the past six months.  We listed the property and received an offer from an interested buyer at full listing price.  This buyer was an investor, the offer was for cash and the closing date was reasonable.  "Wow; a perfect situation.  Right?????"  

Well, not so fast.  The seller provided the necessary documents as requested when the short sale was initiated with the seller's mortgage holder.   This "hardship package" typically includes a letter explaining the seller's hardship, the past 30 days most recent bank statements, the past 30 days pay stubs, IRS form 4506T-EZ  (or 4506T for self employed borrowers or borrowers with rental income), and a breakdown of their monthly income and expenses.   However, Fannie Mae backed mortgages require a Uniform Borrower Assistance Form.  The individual mortgage holder may use their own proprietary forms.  This form replaces the Home Affordable Request for Modification and Affidavit and the Fannie Mae Form 1020 (Borrower's Financial Form).

 I use this client example to demonstrate that in order to have a successful short sale transaction the seller must be absolutely positive and comfortable with the process and the results.  We encourage sellers to discuss their particular financial situation with their accountant or tax preparer and attorney.  Sellers need to understand how a short sale will affect their credit report and tax implications when compared to the other options available such as foreclosure and deed in lieu.  That way both sellers and buyers can move forward with confidence.  

We believe a short sale is a very good option and less damaging to credit scores.  If you are considering selling your home then one of the first steps is determining your home value.  The next step is to prepare your home for sale.