Short Sales

Today as you will find there are many homes on the market and they are either REO ( Bank Owned ) or Short Sale properties. I often get asked, " What is a Short Sale" ? First of all, the Short part is not the time it takes to get an approval from the Bank. The Short part is what the owner owes on the home, what the current market value is and the amount that is owed to the bank. If you can prove hardship and are unable to make your mortgage, than this might be an option for you. It is better than a Foreclosure or a Deed in Lieu ( DIL ) on your credit and tells creditors , that you tried everything within your power to sell your home. Typically, that means that you probably tried to work with the bank to try a Loan Modification prior to taking the next step. Make sure that you keep great records and notes during the entire process. One of the things that you want to find out is what type of a loan you have and if you have Private Mortgage Insurance ( PMI ). Do you have two loans? If you answered "Yes" , than a DIL would not be an option for you. This would also include any other liens on the property.

If you are thinking of  doing a Short Sale, there is documentation that you will have to submit and every lender varies with what you will need. Contact your lender and make sure to get a check list and documents to help you with this. If you have more than one loan, you will need to fill out paperwork for each one separately. If you have a Realtor®, they will have to have all of this as well and will have to update the information , once you receive an offer. They will also need a letter of authorization to speak to the bank in regard to your account.Very important to have a Short Sale Specialist or a Realtor® that has closed many of them. They can be very complex and time consuming. Just remember, " Good things come to those who wait".

The way it works is, you make or receive an offer and then it is submitted to the lender, which many times is only the servicer of your loan. Then it is assigned an negotiator and they will review the file and documents and send them to the investor for review. If closing costs are being asked for... if they pay any, I have seen no more than 3% being offered. There are some lenders that use a third party and they must be an attorney or licensed Realtor or agent.  If you have an FHA or VA loan , that will be the investor and if there is PMI, that will be a separate investor as well. Same with a second loan....that will be a separate negotiation as well. Remember a Short Sale is actually a Pre-Foreclosure and you are liquidating the property. Price your property accordingly, though not so low that the bank will never take your offer. You will be signing the contract , since you are still the legal owner. Sometimes it is more profitable for the lender/ investor to Foreclose than to Modify or Short Sale the property. ( Whole different discussion...keep your eyes open for it. )

If  you do get a Demand Notice / Trustee Sale Notice remember, if you do have an offer on the property than 9 out of 10 times you can get the date postponed or cancelled. Also, remember once you do get approval they will give you typically a maximum of 30 days to close the transaction. If you should have any questions on this process, please feel free to comment and I will get that posted for you. If there are any topics you would like to see, let me know. :)