A short sale requires an offer on the property and negotiated bank approval. Below is a simplified walk through of the short sale process:
The initial focus on a short sale is to get the property under contract. How long this phase takes will depend on many factors, such as price, location, curb appeal, etc. It is paramount that the listing agent prices the property with the seller’s time constraints in mind.
Once the property is under contract, the focus of a short sale will shift to loss mitigation work to negotiate with the lender. This phase can take from one to four months depending on how many mortgages and other liens needs to be negotiated, how overwhelmed each lender is with short sales, the particular investor’s work rules, and the attractiveness of the offer presented compared to the lender ordered property value.
Submitting a complete short sale package is only the very first step in the loss mitigation phase. A basic short sale package will consist of at least the following components:
• Executed contract
• Buyer-pre-approval letter
• Preliminary HUD (closing statement)
• Listing agreement
• Listing history
• Paycheck stubs
• Bank statements
• Tax returns
• Financial worksheet
The goal of the short sale package is to provide a compelling case to the lender as to why it makes business sense to approve the short sale. It needs to be as complete as possible and assembled in such a way that leads the case worker to quickly and easily reach the logical conclusion.
Once a complete short sale package is on file, the lender will assign a case worker or analyst or negotiator to the file. The case worker will then order a value for the property either via a BPO (Broker Price Opinion), CMA (Competitive Market analysis), or a full appraisal to assess the attractiveness of the offer presented. The case worker will then begin negotiations based on work rules of the specific investor holding the mortgage. During the loss mitigation phase, constant contact with the lender and a good understanding of the processes and intricacies are the keys to success.
Should there be second mortgage or other outstanding judgments/liens, then additional negotiations will be pursued either in sequence or in parallel with the first mortgage holder.
Once a negotiated settlement is reach with all stake holders, then short sale can then proceeds to closing. The short sale approval is usually good for 30 days to allow sufficient time for closing to happen. The unbendable rules of a short sale settlement are that the seller can not walk away from the closing table with any money and the lenders must net at least the approved payoff amount.
Did you know that nationwide short sale success is less than 15%? This is because most Realtors are unfamiliar with short sales and end up making many common short sale mistakes. Unlike most, Certified Distressed Property Expert designated Realtors have a success rate of more than 85%!
With your financial futures on the line, you need a specialist on your side. I urge you to contact MD Short Sale Real Estate today for a free short sale evaluation if you think short sale might be right for your situation. I will reach out to you right away to discuss your situation in strict confidence.
