This article is written from the perspective of a homeowner that has a need to short sale their home or property. The exact process might differ from state to state, Realtor to Realtor, and bank to bank, as there are no absolutes that have been defined for this process. If you have reviewed all options available, and have determined that a short sale is right for your situation, then this seven-step outline of what a home seller can expect should help give you an idea of the process. Again, this is a general outline:
1) Realtor and Attorney will determine if seller will qualify for a Short Sale based upon the Lenders guidelines.
Is there more owed on the property than it's present market value?
A comparable Market Analysis (CMA) will be ran to determine the market value of the property
Is the Seller presently behind on payments, or anticipate falling behind on payments in the near future?
Lenders now realize that many factors that contribute to a potential default. Many lenders are eager to head off future problems at the pass.
Is there a hardship?
Examples of hardship are:
Unemployment
Divorce
Medical emergency / sudden illness
Bankruptcy
Death
2) Seller begins preparation of "Hardship" package to include, but not limited to:
Income/Expense Report
Hardship Letter
Copies of Two most recent Paystubs
Copies of Two most recent Bank Statements
Copies of Previous two years of Tax Filings.
3) Realtor lists the property for sale and collects offers.
4) Seller accepts an offer, contingent on Lender and Seller coming to agreement on the terms of the short sale.
5) The seller accepted offer is submitted to the sellers Lender for approval.
Note: A short sale is dependent on a buyer making an offer to purchase. If the seller does not receive an offer, there is nothing for the bank to review, and therefore, the seller will not qualify for a short sale. So even if you meet all the other criteria, it is possible that no one will offer to buy the short sale listing. A successful short sale is also dependent on the lender accepting the buyer's offer. If the lender rejects the offer, a short sale will not take place. In this case, a new, stronger offer will need to be submitted if the lender allows enough time before foreclosing.
6) If the lender accepts the offer, a "Letter of Acceptance" is issued, the buyer and seller sign the letter, and the escrow period begins.
7) Escrow closes when the buyer delivers the funds, the lender releases the lien and the seller delivers the deed.
Be sure to review all options available you before pursuing a short sale. A loan modification, or Deed in Lieu may be a better option.
Ron D Capron Licensed full-time Realtor and Investor. Licensed in the State of Arizona. AzFamilyLiving.com
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