Short Sale in Layman's Term

So, how does a short sale really work??  First, the home owners need to contact the loss mitigation department of the mortgage company and ask for hardship package and talk to them about listing their home as a short sale.  If ok by bank, we list property at price to attract buyers (having no idea what bank will accept)....and try to agree to drop price every two weeks or so until we get an offer. Then the waiting game begins. I am a Certified Distressed Property Expert and know the long list of paperwork required to be submitted with the offer so that they have EVERYTHING they need and we don't get to bottom of pile for missing paperwork. A lot of the paperwork is personal financial data on sellers - takes bank anywhere from 60 days to 14 months to go thru paperwork to determine validity of hardship...and then we get assigned a negotiator. At some point they will have property appraised and actually look at the offer...and usually will "counter" the offer to meet price they need. If buyer accepts counter, then the negotiator will submit everything to the investor, and we will hopefully get "pre approval letter" and begin the normal closing process with buyer's lender, appraiser, etc.

Most often we lose buyers in this long waiting process - and then we get another one and they have the advantage of shorter timeline to wait as the process has begun....if they only have one mortgage, it makes the process much easier - if there is a second (or even a third) it involves more banks and more paperwork and lots of negotiation to try to get the first to pay something on the other notes...and/or the 2nd-3rd will contact the Seller and have them fill out paperwork to pay off portion of the note(s) - depends on the lenders. 

Sometimes it takes too long to get an offer (or sometimes third party approval) and the house gets sold on the courthouse steps and becomes a foreclosure.

Re price of home and mindset - Sellers have to let go of the value of the home and focus on getting out from under it. Whether it's $1,000 less than loan amount or $100,000 less than loan amount, it doesn't matter - the bank is losing the money, not them. And, the bank pays commission, attorney fees, and the rest of the closing costs. I've had them ask Seller to bring $1250 to $5000 to closing table, and sometimes nothing. And, in most cases, the difference in loan amount and payoff is forgiven.

There are differences on Seller's credit depending on whether they sell home as short sale or foreclosure.  It is going to take a lot of time and patience on the part of both the Seller AND the Buyer, but in the big picture, I believe it is worth it.

Click here to learn more information about HAMP and brand new offering, HAFA - changing the rules for the improvement for all!!

If I can answer any more questions, please feel free to contact me anytime at 304-261-8517.

Thank you!

Andrea Burke

Certified Distressed Property Expert!