Search for Homes  |  Buy a Home  |  Sell a Home  |  Featured Homes  |  Short Sales  |  Commercial Property  |  Armstrong Field Real Estate Home Page

The Short Sale Process

1. List your property for sale. Most lenders will not even talk about a short sale until you present them with an offer from a qualified buyer. Even if you wanted to do a "deed in lieu of foreclosure", the lender wants you to place it on the market for at least 90 days before they will consider it. Your property should be priced to sell quickly - which means below current market value. The lender will not allow you to receive any proceeds from the sale of the property, so from your standpoint it doesn't make any difference what the list price is. But we do want to get an offer that the lender would be willing to accept, so it can't be priced too low. Once we receive an offer that is acceptable to us, then we can start the short sale process with the lender(s). Keep in mind that if there are two mortgages on the property, then all the steps below have to be done with each lender separately. This can increase the time that it takes to get the short sale approved.
    

2. Present the offer to the lender(s). Along with the offer, we must send all the documentation that the lender requires. This includes personal financial and bank statements, paycheck stubs, a hardship letter stating why you need to do a short sale, a copy of the listing agreement and several more documents that only a Realtor or attorney experienced in handling short sales can provide. The lender will assign a negotiator to the property. The negotiator will send someone to the property to obtain an opinion of what the property is worth in the current real estate market. It will typically take 30-60 days for a lender to respond to an offer.

3. Negotiate the offer. The lender(s) may counter the offer. The negotiation can sometimes last for days or weeks. Typically, the 1st mortgage holder will only allow the lender that holds the 2nd mortgage a small portion of what it is owed - typically $3,000 to $10,000. If the property went into foreclosure, the 2nd mortgage holder receives nothing, so they will usually settle for whatever the 1st lender allows them to have. Not only does the lender have to approve the short sale, but approval must also be obtained by the investor and, if required, the mortgage insurance company.
    

4. Acceptance of Offer and Closing. Once the lender(s) accept the offer, it will usually give only 30 days to close. The buyer's financing must be in place quickly. In most cases, we would want the buyer to do a home inspection before the offer is presented, but some buyers insist on waiting until after their offer is accepted. You, the seller, will still be responsible for any closing costs and miscellaneous fees (usually less than $500), but your Realtor will negotiate to get the lender to pay for as many of these cost as possible.