Newport Short Sale Guide

With the decline in home values, many homeowners in Newport Beach CA are opting for short sales as an alternative to foreclosure. Put simply, a short sale is when your lender agrees to let you sell your home at a loss, accept the proceeds, and forgive the rest of the loan. This makes a good substitute to foreclosure because it's less damaging to your credit and is easier to recover from.

Of course, short sales aren't exactly a breeze-after all, you're still on the losing end. But there are ways to speed up the process and help you get more out of the deal. Your first step should be to arm yourself with information on the Newport Beach real estate market and how short sales are done on Newport Beach homes. If you're considering a short sale, read on for a quick step-by-step guide to short sales in Newport Beach CA.

1. Call Your Lender.

Before anything else, you need your lender's approval for the short sale. In most cases this will be handled by the bank's Loss Mitigation department, but you may need to make several calls before you reach the right person. Save yourself the trouble by looking up the names in a Newport Beach real estate listing or servicer directory.

2. Find A Good Agent.

Real estate agents are increasingly taking on short sales as the housing crisis continues. While you don't technically need an agent, working with one can help you get better service at the bank, make sense of the paperwork, and find more potential buyers. Choose an agent with a good track record for selling Newport Beach homes, particularly in short sales or similar tight situations.

3. Write A Hardship Letter.

This is one of the main requirements for short sales in Newport Beach CA. The hardship letter explains to your lender how you fell behind and justifies your request for a short sale. Lenders are more likely to understand reasonable causes such as job loss, hospitalization, a death in the family, or the general decline in the values of Newport Beach homes. Make it clear that the situation is out of your control and that a short sale is your only option.

4. Prepare Your Documents.

You'll need financial documentation to prove the claims in your hardship letter. Each lender has its own requirements, but generally you will have to provide proof of income and assets, bank statements, tax returns, and any proof you have of your reason for defaulting.

5. Price Your Home.

If your lender agrees to a short sale, you can start taking steps to put your home on the market. Needless to say, your selling price won't be at par with other Newport Beach homes for sale. Your agent can draw up a comparative market analysis (CMA) to give you a better picture of the Newport Beach real estate market, particularly in the short sale area. Once you've decided on a price, your agent can help you create a Preliminary Net Sheet-a formal estimate showing your expected sale price and other related expenses, such as commissions, unpaid balances, outstanding payments, late fees, and the costs of sale.

6. Find A Buyer.

This is probably one of the trickiest parts of making a short sale. While some buyers are drawn to the low price, they tend to be wary of Newport Beach homes with troubled mortgages. Do what you can to make your home more attractive and get it noticed among the other Newport Beach homes for sale. Your agent can help you market your home and find buyers specifically looking for short sales in Newport Beach CA.

7. Get Back To Your Lender.

Once you've found a buyer and agreed on a price, you'll need to send your lender a copy of their offer and the listing agreement. Most lenders will attempt to negotiate commissions or make you shoulder some of the expenses, such as the inspection or protection plan. Again, you can ask your agent for advice-they'll know how Newport Beach real estate works and tell you when an offer is fair or unjustified.

8. Close The Sale.

Short sales are closed in much the same way as other Newport Beach homes, except that your lender receives the payment. Once it's completed, you can try asking your bank not to report adverse credit on your part to help save your records. However, this isn't their obligation and you may have a better chance letting your agent or a lawyer do the negotiations.