A short sale occurs when a property sells for a price that is insufficient to pay back the loan or
other liens against the property, also including any past due HOA fees, tax liens, and closing
costs.
As a home seller, you have to either agree to bring cash from other resources to cover the
difference, or agree with your bank to forgive all or a portion of the shortfall. You could still end
up with a promissory note or some other alternative to make arrangements to repay your
lender the amount you owe, even after the sale.
other liens against the property, also including any past due HOA fees, tax liens, and closing
costs.
As a home seller, you have to either agree to bring cash from other resources to cover the
difference, or agree with your bank to forgive all or a portion of the shortfall. You could still end
up with a promissory note or some other alternative to make arrangements to repay your
lender the amount you owe, even after the sale.
You may be able to negotiate a loan modification, refinance, deed the property to the lender in
lieu of foreclosure, or declare bankruptcy in lieu of attempting a short sale, as just a few
examples. In all cases, you should consult a qualified attorney and/or financial consultant for
your personal circumstances.
lieu of foreclosure, or declare bankruptcy in lieu of attempting a short sale, as just a few
examples. In all cases, you should consult a qualified attorney and/or financial consultant for
your personal circumstances.
There is no universal set of rules or regulations that determine if you are eligible for a short
sale or if your lender will approve it. Each lender is different and has their own set of criteria.
Some lenders will not communicate with anyone but the home owner, some will not
communicate with you unless you are already in default. Some basic steps in the short sale
process after listing the property are:
sale or if your lender will approve it. Each lender is different and has their own set of criteria.
Some lenders will not communicate with anyone but the home owner, some will not
communicate with you unless you are already in default. Some basic steps in the short sale
process after listing the property are:
- Proving financial hardship: Most lenders will require you to provide specific information such as a
financial affidavit, tax returns, bank statements, and pay stubs. - Demonstrating property value: Frequently, your lender will require a Broker's Price Opinion (BPO) or
Comparative Market Analysis (CMA) from a Realtor. It may also order and appraisal of the property
from a licensed appraiser of their choice. In some cases, they may require that you pay for this
service. - Finding a Buyer: A qualified buyer must submit and offer to purchase the property, which is then
submitted to the lender for approval after you as the seller have agreed to the offer. Many lenders will
not even consider a short sale until an actual offer has been received to purchase the property. - Final approval: It's up to you to convince your lender that it's in their best interest to accept your short
sale and approve it. Most lenders have a specific department that handles these requests and is
called either the Loss Mitigation, Pre-foreclosure, or Loan Workout department. A short sale typically
costs the average lender 19% of the sales price, and a foreclosure costs 40% of the sales price, so use
this information with your lenders.
Until you get a final approval, assume your short sale is not approved. You may or may not
get regular communication from your lender through the process. The closer your short sale
price is to area comparable sales will give you a greater likelihood of being approved. The
good news is that banks are moving more quickly on short sales.
get regular communication from your lender through the process. The closer your short sale
price is to area comparable sales will give you a greater likelihood of being approved. The
good news is that banks are moving more quickly on short sales.
Every short sale is different. In the current market, short sales are occurring with more
frequency as the volume of foreclosures begins to drop, so your lender may be able to
respond fairly quickly. I advise you do to everything you can in advance, such as gathering all
your financial information, to prevent any delays through missing paperwork. It's important to
remember that your lender may not approve your short sale offer, and you should be
considering other options available to you during this period in the short sale process in the
event your request is denied.
frequency as the volume of foreclosures begins to drop, so your lender may be able to
respond fairly quickly. I advise you do to everything you can in advance, such as gathering all
your financial information, to prevent any delays through missing paperwork. It's important to
remember that your lender may not approve your short sale offer, and you should be
considering other options available to you during this period in the short sale process in the
event your request is denied.
Even if you are not in foreclosure, a short sale may adversely affect your credit rating. I
recommend you consult with an attorney or tax/financial advisor regarding these issues, to
find the best option for your personal situation
recommend you consult with an attorney or tax/financial advisor regarding these issues, to
find the best option for your personal situation
I will have a list of documents for your short sale listing so we can get you started on finding a
buyer as soon as possible. The official short sale process cannot begin without an offer from
a qualified buyer.
buyer as soon as possible. The official short sale process cannot begin without an offer from
a qualified buyer.
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More and more I am convinced the answer is no. Short sale negotiators grew out of title
companies and real estate attorneys experiencing decreased business in the real estate
downturn.
Short sale negotiators are supposed to do the mundane tasks that most agents won't do, like
gathering the seller's financial information, and constantly working for the seller's best
interests through continual follow-up with the lender to make sure the sale closes on time.
In reality, a low-level person on the short sale negotiating team is assigned these tasks. Too
often, the short sale negotiation team ends up being the spokesperson for the lender, but their
fee was paid for by the seller.
You should definitely consult an accountant and/or an attorney to be clear on the particular
legal and financial ramifications of your short sale, but be careful. Many of these short sale
negotiators want to be paid in advance. Like any other trade, you lose a lot of leverage if there's
a problem and they have already taken your money.
I hate to see people in financial distress pay extra fees that are not necessary. You don't need
to pay any money to sell your home as a short sale and negotiate terms with your lender!
companies and real estate attorneys experiencing decreased business in the real estate
downturn.
Short sale negotiators are supposed to do the mundane tasks that most agents won't do, like
gathering the seller's financial information, and constantly working for the seller's best
interests through continual follow-up with the lender to make sure the sale closes on time.
In reality, a low-level person on the short sale negotiating team is assigned these tasks. Too
often, the short sale negotiation team ends up being the spokesperson for the lender, but their
fee was paid for by the seller.
You should definitely consult an accountant and/or an attorney to be clear on the particular
legal and financial ramifications of your short sale, but be careful. Many of these short sale
negotiators want to be paid in advance. Like any other trade, you lose a lot of leverage if there's
a problem and they have already taken your money.
I hate to see people in financial distress pay extra fees that are not necessary. You don't need
to pay any money to sell your home as a short sale and negotiate terms with your lender!
| I hate seeing people who are in financial distress spend money they don't have to. If you are considering selling your Sarasota area home or condo as a short sale, DO NOT hire an agent or pay anyone a dime until you read this page and follow the links provided to learn more about the short sale process. |
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