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Created on Monday, 09 January 2012 06:54

Short Selling a Rental Unit

The process of short sale has fast become a viable alternative by which most homeowners can avoid foreclosure. Unfortunately, the short sale process is not only limited to individuals who own residential apartments.

Many of those who took huge home loans during the flourishing days of the housing sector so that they could acquire rental property find themselves in a situation where they cannot pay their mortgages.

Owners of rental units who are in financial distress can also exploit short sale as their last line of defense against foreclosure.

The process begins with the property owners evaluating and putting the right price on the property. Over pricing the property may discourage buyers while underpricing it may also cause the mortgage lender to feel that the financial loss associated with the short sale process is too huge. In such a case, the lender may object to the owner’s decision to short sell the property.

Just as it is with trying to short sell a residential unit, the person who wants to initiate a short sale of a rental property needs to secure the approval of the mortgage lender. In order for the seller to attract the interest of the lender, he or she must make sure that the services of a broker or an experienced real estate appraiser is employed to ascertain the actual value of the property.

Sellers can have a rough estimate of how much their property would cost be monitoring the properties that have been sold or put up for sale within their locality that have similar characteristics as theirs.

Sellers have to take into consideration the cost of completing the short sale process. With these estimates, people who intend on short selling their rental apartments can quote a suitable price that will help attract the interest of buyers while ensuring that the mortgage provider remains committed to the deal.

Once the seller attracts the interest of a buyer who wants to purchase the property, it is in the best interest of the seller to ensure that nothing about the property is hidden from the buyer. Hiding important facts from the buyer could cause the buyer to pull out of the deal at the latter stage in which case the seller has to restart the entire process. This can cause a great deal of inconvenience to the already frustrated homeowner who wants to avoid foreclosure and all the negative effects that come with it.

If the buyer is serious about the property, he or she would insist on it. The seller then has to sell the idea of short sale to his or her lender. It starts with the seller getting in touch with an official of the mortgage company that is mandated to see to the short sale process within the organization.

The officer in charge of short sale will require that the seller presents a letter that authorizes the lender to give valuable information about the borrower to real estate agents and other lenders who would make the short sale process possible. The seller also needs to present a hardship letter to his lenders. The hardship letter will help the lender to understand the borrower’s state of financial distress. The lender would also require a document that shows that there is a buyer committed to the process; the document should also state the price for which the property is to be sold.