Have you ever wondered what actually takes place during the short sale process? This article was written to give some basic insight as to how a short sale in Phoenix, AZ works. First and foremost, what is a Phoenix short sale? A short sale takes place when a homeowner’s loan balance is higher than the current market value of his home. The homeowner usually must demonstrate to the bank that he can no longer afford the home. If the homeowner can prove a financial incapability to pay on the mortgage, sometimes banks will agree to allow the sale of the home for less than what is owes.

Although the Phoenix short sale process can differ greatly between each bank, there are some common elements that take place. The most important characteristic of getting approval for of an AZ short sale is the seller’s ability to prove that they are financially incapable of continuing to pay the mortgage. Why would the bank agree to losing money on their loan if the homeowner can still make payments on the mortgage? This beginning part of the Phoenix short sale process is crucial in order to get an AZ short sale initially approved with the bank.

There are many documents that will be requested by the bank to verify that the home owner can no longer afford the home and to prove that a Phoenix short sale is a necessity. Although every bank will have its own list and requirements of documentation concerning an AZ short sale, there are a few commonalities.

Many banks who are considering to agree to a Phoenix short sale will require current bank statements, tax statements, proof of income, and 401k account balances. The aforementioned documents are just a few of the many Phoenix short sale documents that banks will typically ask for. Arguably the most important document for getting a Phoenix short sale approval is the hardship letter.

The hardship letter is a personal statement from the homeowner which explains their financial troubles. This is obviously not a fun letter to write or to read. But unfortunately, documentation of one’s personal financial crisis is almost always a rock solid requirement for the acceptance of a Phoenix short sale. Usually, this letter must give an in-depth explanation of exactly how the financial turmoil took place, and specifically why they can’t pay the mortgage.

The next most common requirement to get approval for a Phoenix short sale is to get the home listed with a licensed real estate agent. Banks like to see that the home is listed with an agent to verify that home is being properly marketed and sold. Most banks will not allow a Phoenix short sale or AZ short sale without the interaction of a licensed real estate agent. This means that the homeowner cannot try to sell the home themselves.

Another aspect that is an integral part of the Phoenix short sale process is the BPO (broker’s price opinion). This is an independent evaluation of the home’s current value by an approved real estate agent. The BPO is used to verify the true value of home. The BPO will be used as a guideline to inform the bank of how much must be adjusted to the price of the home.

In conclusion, there are many “working parts” to a Phoenix short sale. This article has made an attempt to highlight a few of the many bank requirements. When considering a Phoenix short sale, or AZ short sale, always consult with an attorney. When done properly, a Phoenix short sale can be a “win-win” for everyone involved.