(Originally posted May 2017)
Despite rising real estate appreciation and an improving economy, many Las Vegas homeowners remain in financial hardship and under water in their houses and might consider a short sale.
The housing market here has improved dramatically since the crash, but unlike most parts of the country, values have not returned to peak just yet, and Las Vegas is still one of the metro areas with the highest percentages of distressed properties and folks facing financial hardship.
A short sale, when you sell the house for less than is owed on it with the agreement of the bank, will hurt the homeowner’s credit, but generally not as much as a foreclosure.
It does require that you convince the bank that your financial circumstances require surrendering the home and getting out of the loan. How much you owe compared to the remaining loan amount and the value of the home matters. But the rest of your financial obligations and income do too.
So gather up statements to show your income and expenses and prepare a monthly budget that shows your finances are under water. You also should pen a “hardship” letter to the bank explaining your circumstance and requested the short sale. That should tell in narrative form why you need this, including anything that isn’t evident in the documentation, like an ongoing costly medical condition, impending divorce or a job layoff notice.
You should also explain what steps you’ve taken to fix your financial hardship, like taking or applying for other jobs, attempting to sell the property, or reducing other expenses. Also include your loan details, expenses and loan number. Date, sign and send it.
The lender will review your proposal to decide if your hardship is really a hardship and (most importantly) if it’s likely that lender going to take a loss on the loan fairly soon. Many lenders would rather lose a little on the unpaid loan than have you stay in it without paying and then have to go through an expensive and sometimes time-consuming foreclosure process — only to wind up with a home that hasn’t been taken care of.
It’s important to work with a Realtor or someone who is familiar with the short sale process so you don’t forget something truly important, such as getting a deficiency letter from the lender (that’s the instrument that will keep them from coming after you for the balance of payment after the house sells).
By Hal DeKeyser