The Short Sale Process

You've made the decision to short sale your home. Now what? There are a few steps in the Short Sale process you need to take. Don't worry! I'll walk you through them:

1. Get Help!

Negotiating a short sale with a lender is a time consuming process at best. It is wise to work with a professional real estate agent who has worked with lenders on short sales before. I have the experience and connections to successfully negotiate the sale on your behalf. I know who to contact and what steps to take to get you through the process successfully and with a minimum of frustration.

Don't worry that you can't afford professional help. It does not cost you anything to short sale your home, and you should never have to pay someone a fee to negotiate the short sale on your behalf. I get paid by the lender when your home is sold.

Now that you have an agent on your side, you will need to sign a Third Party Authorization so that I can speak to your lender on your behalf about your property.

2. Listing Your Home for Sale

Your property will be placed on the market for fair market value, and you will sign a listing agreement that includes verbage that the sale of the home is contingent upon lender approval.

Most lenders will only consider offers that net close to what your real estate appraises for, based on their independent appraisal, and the criteria or the end-investor on your loan. "Net" means after all costs, including any payoffs to second mortgage holders, taxes, real estate commission, title insurance, etc. Thus we will monitor your list price closely to advise you of probable bank appraisal.

3. Getting an offer

When we receive an offer, we will ensure that it states that the sale is "contingent on seller's mortgage holders' approval." You may counteroffer the buyer at this step, as we don't want to send an offer to the bank that we think will be rejected.

The agreement, with your signature, will be sent to your lender along with an application package:

4. The Short Sale Application

We will package up the contract with the following documents and fax or Express Mail them to your lender:

• Buyer's pre-approval letter
• A Hardship Letter which explains why you need to Short Sale (Tips for writing this letter)
• Financial Worksheet itemizing your income and expenses
• Two Most Recent Pay Stubs or quarterly profit and loss, if self employed
• Two Most Recent Bank Statements: Your statements need to include checking accounts, savings accounts, retirement accounts, and any other cash accounts
• Past Two Years Tax Returns
• Estimated Net Sheet or HUD-1 Settlement Statement and other documents 

Note: Different lenders have different proceedures for short sales, thus the required documentation may vary slightly from one lender to another.

Expect to wait 90 to 120 days for a response from the bank. They will be ordering an independent appraisal and/or Broker Price Opinion on your real estate to ensure the offer is for fair market value. If the appraised value is higher than the amount offered, they may counter-offer at the appraised price. The buyer may choose to comply, to stay firm, or to increase his offer at this point.

If two lenders are involved, or a Mortgage Insurance Company (PMI), we will facilitate the negotiations between them, focusing on a fully-approved sale on your behalf.

If the lender deems that you have sufficient income or savings, they may ask you for a cash contribution or promissory note, usually at favorable terms, to mitigate some of the loss.

Further steps and negotiations occur behind the scenes. Rest assured, we will be following up on a successful sale for you every step of the way!

Note: It is always advisable to take time to speak with a tax consultant and/or attorney to be sure you fully understand any tax consequences!