What is a Short Sale?
A short sale is when the owner of a property owes more than what his home is worth. Without a short sale the seller of the property would have to come to the closing with cash to make up the shortage. In today's economy that rarely happens. Most times, the seller negotiates with the lender to accept a "short" payoff. The lender settles for less than what is owed and agrees to release the lien on the property so that it can be sold.
The Short Sale process
The Initial Interview
An experienced Short Sale agent will begin with the interview. In this meeting they will ascertain if the prospective seller is a good candidate for a short sale.
Does the homeowner owe more than the property is worth?
Has something changed since they agreed to the mortgage?
Does the homeowner have a hardship?
Is the homeowner willing to gather the necessary documents? These documents include financial statements and pay stubs to begin with.
Is the homeowner cooperative and easy to get along with? Remember the professional is here to help, if the homeowner seems uncooperative there is a good possibility there will be challenges along the way.
The Short Sale package
All documents that need to be submitted to the bank are gathered prior to putting the home on the market. The final piece of the short sale package is the purchase contract. We will get that in the next step.
Marketing the property
Assuming that the interview works out, the next step is to market the home for sale. Property should be shined up as much as possible, professional photos taken and the property shown to the market. The main idea is to get an offer in a reasonable period of time. Nothing is gained from being overpriced and languishing on the market.
Receiving an offer
The goal is to get a fair market price for the home. By pricing the property correctly there is a great chance of receiving an offer quickly. The offer is negotiated like a traditional transaction. Once all parties are satisfied everyone approves the contract. Now that we have an accepted offer we can tell the bank exactly how much they can expect to receive.
Submitting the Short Sale package
The Short Sale package is then emailed to the bank(s) that we are requesting the short sale from. The bank(s) will look at the hardship letter, the financials and the offer to decide if the person qualifies. Once they qualify, the bank will send an appraiser to the home to give the bank a statement of value. As long as the offer is in line with the appraisal you are good to go. A negotiator is assigned to the file and will be your contact with the bank.
You've been approved!
Once the package has been approved, you typically have thirty days to close on the property. In certain circumstances, the bank(s) may extend, but they really don't like to.
What is the next move if I think I may be in a Short Sale situation?
Contact a specialist. Have a meeting to go over your options. Right now we are all going through difficult times. There are people to help. My contact information is below, contact me or any other qualified professional. Make sure you do something.
Recent Short Sale Timeline - Short Sales don't always take forever!
Initial interview on March 1, 2010.
All documents were gathered and there was a second meeting on March 6.
Put the home on the market that night.
There were four offers on the home and we took the one that was $12,000 over the asking price.
Contract was accepted on April 1.
Short Sale package submitted to the bank the same day, bank appraisal was done the following week.
File was in process with the negotiator for almost two months.
Fortunately I have had previous dealings with this bank.
On May 27 approval was given with a closing date of no later than June 30.
House was sold on June 24.
Buyers were able to get their $8,000 tax credit and all was right in the world of short sales.
Get Educated. Get Empowered.
For more information on this or any other topic, call Sal Poliandro, Broker Associate, Realtor, Marketing Advisor,
Short Sale Specialist and CDPE, Certified Distressed Property Expert
ePRO, SRES at 201-957-7650, visit our website: www.BCHomeTeam.com
Follow me on Twitter: @salanddawn
Sal can be reached by snail mail at RE/MAX Properties 82 East Allendale Road Suite 4B Saddle River, NJ 07458