Short Sale Process

Short Sales begin when the homeowner owes more on the home than it's worth.Then, a hardship creates the circumstances in which the property owner can no longer afford to make the mortgage payments on the home.

 

The Goal of the Short Sale
Determine Current Value?
Hardship
The Financial Package
Listing and Advertising the Home For Short Sale
List Price
The Offer to The Lender
The Bank Process - Sellers Mortgage Holder
The Close & Moving

 

The Goal of the Short Sale

Relief from Financial Hardship and Avoid Foreclosure.  

Primary Residence that qualifies for the HAFA Program→:

Avoid Foreclosure -  10-1-2010 Fannie Mae guideline prevents another mortgage for 7 years.
Release from liability of first mortgage.
Release from any deficiency judgment of first mortgage.
No cash contribution
Up to $3,000. for Your relocation.

Primary Residence, Second Homes, and Investment Homes that do not qualify for HAFA:

Avoid Foreclosure -  10-1-2010 Fannie Mae guideline prevents another mortgage for 7 years.
Release from liability of the mortgage.
Release from any deficiency judgment from the mortgage short fall.
No cash contribution

All of the above items must be negotiated and may not be available from each Lender.  
The Lender may refuse to give a deficiency waiver.  
The Lender may require a cash contribution from the Seller to reduce their loss.
The Lender may require the Seller to sign a promissory note to reduce their loss.
This is why you should hire an experienced REALFi Certified Short Sale Realtor to help you negotiate.

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Determine Current Value?  

You could hire a licensed appraiser for their opinion.
Another option is to hire our Brokerage for a No Cost - Short Sale Consultation→

This consultation will include a Comparative Market Analysis (CMA).  The CMA will give the home owner a very good idea of the current market value based on other similar homes currently for sale nearby.

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Hardship

Financial hardship is a documentable event which has created a change in circumstances in which you now are unable to afford your home.  Here are a few:

 

 

 

 

The only reason a lender will agree to a short sale is if they determine that a short sale will net them more money than proceeding with the foreclosure. Understanding the homeowner's financial hardship plays a major role in the lender's estimation of whether or not it will be paid in full for the mortgage. Quite simply, lenders will make the borrower pay the shortfall if there is no hardship.

Many homeowners try to use a short sale to dump a poor investment. Lenders will not allow this, and it is a waste of time to try. If you are employed and have some assets, but you have simply lost value in your home and want to sell, you probably cannot short sale. If you are current on your mortgage, it is very difficult to short sale. Lenders need to see that you simply cannot pay them before they will agree to a short sale.

After determining you owe more than your home is worth and there is a financial hardship you will need to gather your financial information so we can assemble a financial package to submit to your lender.  

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The Financial Package will usually include:

Letter of authorization, which lets us speak to the bank.
Listing Agreement & Disclosures
HUD-1 or preliminary net sheet
Completed financial statement
Seller's hardship letter
2 years of tax returns
2 years of W-2s
Recent payroll stubs
Last 2 months of bank statements
Comparative market analysis or list of recent comparable sales

If the property we are trying to Short Sale is your primary residence and the lender participates in the HAFA program the lender will respond to our financial package with an approval and list price or a decline and the reason for the decline.

The Bank will most likely ask for additional documents and document updates each month.  It is very important that you are ready to supply a complete financial package and submit updated documents each month.  Any hesitation or delay in forwarding the requested documentation will delay the short sale process and the lender may cancel the transaction.  If you are not ready to provide this documentation then a Short-Sale is not for you.

No Cost - Short Sale Consultation

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Listing and Advertising the Home For Short Sale

Don't list your home for sale with just any Realtor.  REALFi has Agents that specialize in Short Sales.  These Realtors have formal training and are Certified Short Sale Realtors.  An agent that does not specialize in short sales will most likely take much longer to complete a short sale if they are able to be successful at all.

It is very important you hire an experienced Certified Short Sale Realtor because there is a very short limited amount of time to complete a short sale transaction and avoid Foreclosure.
Your home can be sold at sheriff sale in less than 200 days from the first late on the mortgage.

Our Marketing Program will give your home an incredible amount of exposure in the marketplace!!!

“More than 70 percent of consumers start the buying and selling process on the Internet”

According to Realtor Magazine 08/01/2004 NAR Research

Don’t let your home miss the Market??

The                   MARKETING PROGRAM Can Help!!

Here are a few of the Search Engines and sites Your home will have exposure:

 

           

 

         

 

                                   

                

  

 

 

 

 

 

       

Click Here to Get Started - No Cost - Short Sale Consultation  →

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List Price

THE TIME IT TAKES TO RECEIVE A QUALIFIED OFFER IS DIRECTLY RELATED TO THE ADVERTISED LIST PRICE OF THE PROPERTY RELATIVE TO THE CURRENT MARKET!!!!

That is why we can't stress enough!!:
We recommend the advertised sale price be at least 10% below the current market to create a multi-offer situation so we can present a solid qualified arms-length purchase agreement to the lender in a short timeframe to help you avoid Foreclosure.

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The Offer to The Lender

We have a purchase agreement addendum created specifically for short sale transactions.  This addendum puts into writing, to be agreed upon by all parties, understandings unique to the short sale process to help the transaction move along as smooth as possible.  

For Instance:

Does the inspection time line begin upon acceptance of the Sellers only or when the Bank agrees?
What if  the Bank will not give a deficiency waiver?
What if a higher offer comes in?
What will the Seller contribute to the Short-Sale?
What if the Bank wants to lower the commission?
etc.

What the offer will include:

Purchase Agreement and Disclosures
Short Sale Addendum to the Purchase Agreement
Earnest Money Deposit
Buyers proof of funds (cash sale)
Buyers Lender Pre-Approval Letter

We will review the offer and do our best to substantiate the Buyer is Qualified to purchase your property (Not Guaranteed).  Our Addendum helps to make sure the prospective Buyer is ready and agreeable to stay in the transaction for a minimum of 60 days.  Many times a short sale will take longer.

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The Bank Process - Sellers Mortgage Holder

It may take a long time to get a response from the bank. Our agents will regularly call the bank for updates. Buyers may get tired of waiting for a response so they threaten to cancel if they don't get an answer within a certain time period.   This attitude will not speed up the short sale process. If the Buyer has little patience a short sale is not for them.  Our Addendum to the Purchase Agreement contains language to help with this normal Short Sale problem.

Typical Bank Short Sale Process:

Bank acknowledges receipt of the file. (3  or more days).
One or more Broker Price Opinions (BPO) are ordered.  This helps them determine value.  The results
            are usually not shared with the Buyer, Seller, or their Agents.   This can take 10  or more days.
A negotiator is assigned. (3  or more days).
The file is sent for review or to the Investors. (7 to 30 days).
The bank may make a counter offer.
The Buyer and Seller may make another counter offer.  This could go on indefinitely.
The bank issues a short sale approval letter with or without a deficiency waiver.

Some short sales may get approval in 4 - 8 weeks.  Others may never get approval or take months.
It varies from Lender to Lender.  Any delays in submitting requested documents will delay or end the short sale.

No Cost - Short Sale Consultation

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The Close & Moving

Congratulations!!!  The day has finally arrived.
A short sale closing is similar to any other real estate closing.
When you find yourself at the closing table here is what to expect:

 

 

 

 

 

 

 

 

 

 

 

  

 

As you now understand a Short-Sale transaction is very complicated and requires an Agent with a team that specializes in this complex process.  Don't list your home for sale with just any Realtor.
REALFi has Agents that specialize in Short Sales.  These Realtors have formal training and are
Certified Short Sale Realtors.  An agent that does not specialize in short sales will most likely take much longer to complete a short sale if they are able to be successful at all.  It is very important you hire an experienced Certified Short Sale Realtor because there is a very short amount of time to complete a short sale transaction and avoid Foreclosure.
Your home can be sold at sheriff sale in less than 200 days from the first late on the mortgage.

Click Here to Get Started - No Cost - Short Sale Consultation  →

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Please note this is a generalization of the short sale process for information purposes.  The short sale process may vary from bank to bank and lender to lender.  Guidelines may and do change without notice.