The Short on Short Sales

The short sale process starts if you can’t afford mortgage payments and you can’t sell your home for enough to pay what you owe on the loan. Your lender may be persuaded to consider a short sale, in order to recoup as much money as possible from the property.

A short sale depends on if you get behind in your payments due to “legitimate hardship” – you lost your job, for instance, or you had to pay medical bills for the illness of a loved one. (Unfortunately, a once-in-a-lifetime vacation to Aruba doesn’t make the grade.)

Short sales can be good for you as the seller - a short sale on your credit report is better than a foreclosure because it shows that you tried to sell the property and return what you owed to the lender. The underwriting guidelines of Fannie Mae allow you to buy another home sooner than someone who just stopped paying the mortgage.

So after you’ve told the lender your tale of woe, you would list the property with a good real estate agent. This is not the time to call up Aunt Sally or Bobby from grade school – unless they have a proven track record of successful short sales and have references that don’t come from family members or mutual friends. You want someone who is experienced enough to get the best price for your home but recognize the price it just won’t go past.

Once you get an offer from a qualified buyer, you can submit the short sale paperwork to the bank. The bank should then order the Broker’s Price Opinion – someone appointed by the lender to evaluate the property and name a figure that they think the home would go for. If the offer for the home matches around what the BPO says, the bank approves the short sale. Then, the transaction should go like any other real estate transaction.

This is the rosiest picture of a short sale. Many people loathe short sales because of the many things that can go wrong. The lender might lose paperwork or not give you answers to important queries within the timeline stated or make the process more difficult than it has to be for buyers to purchase a short sale. An indefinite waiting period can cause a buyer to completely pull out of the transaction – they don’t want to wait for what another seller can give them right now. An experienced Realtor® is your best bet to get through the short sale process with minimal wear and tear.

Short sales can be a great way to remove the burden of a too-expensive home with a minimal impact on your credit. This is why you need a good Realtor® to protect your interests. Whether you are a buyer or a seller of a short sale home, you need someone who has experience with the unique nature of these kinds of property.