Three Things Not To Do Before Your Short Sale Is Approved And Closed

Three Things Not To Do Before Your Short Sale Is Approved And Closed

A short sale can be a long and sometimes confusing process and as the seller it can be hard to know what to do while you are waiting to close the deal. Realtor® Minna Reid of North Windham, Connecticut reports that she has seen an increasing trend toward investors scrutinizing her clients financial and credit information when making approval decisions on short sales and asking for seller contributions much more often than before. She has some key advice for those looking to have a short sale approved:

Some of my clients are really in tough shape financially and have already ruined their credit, spent whatever savings they had, and are facing foreclosure. Those short sales for the most part are still very easily approved.

This problem would apply much more to those short sellers who have good income, credit, assets, and who have not yet or have just defaulted on their mortgage payments. There’s been a great increase in the past year or two in this more “strategic” short seller and they are exactly who the investors are trying to crack down on and get contributions from in order to approve short sales.

If the above description applies to you, you can pretty much expect that you will be asked to contribute in the form of a cash contribution or promissory note in order to close. However there are a few things you can do to decrease the odds of being asked to contribute, or to reduce the size of the requested contribution. During the approval process and prior to it, do not:

Make large purchases or open lines of credit – buying a new car at this time or going on a lavish vacation will be noticed by the investor and won’t make them sympathetic to your situation.

Accumulate or transfer large sums of cash – this will almost always raise an eyebrow and you will be forced to explain the circumstances.

Start paying off other debt – if you’re paying off your credit cards while not paying your mortgages, be prepared to explain this one to the investor, and again – don’t expect this to work in your favor.

Keep in mind – if you’re flashing money in their face while asking them to forgive your debts, they’ll come looking for their piece as well.

Click here to read more blog posts by Minna Reid.