The Short Sale Process
How To Conduct A Short Sale.
If you are unable to avoid foreclosure in any other effective way -- permanent loan modification, refinancing, etc. -- getting a lender approved short sale is the best remaining option. The process is similar in most cases but will vary somewhat depending on the lender(s) involved and your specific circumstances. Here are the basic steps we will need to go through. When you hire us we will guide you through each and every step.
Step 1: Interview & Hire An Experienced Short Sale Team. Choose wisely! You're looking for the experience, diligence and contacts required for success. We'll meet with you to estimate your home's current market value and discuss your financial situation to determine whether you meet your lender's requirements for a short sale. At this meeting we will review the gathered documents, and any additional items needed. If your situation appears to qualify for a short sale, we'll discuss how together we can put you on the path to lender approval. We will explain the benefits of a short sale and the pros and cons of your other options thoroughly.
Together we'll sign a listing contract that assigns us as your representative for the sale of your home. Before your lender/servicer will share information with us about your mortgage situation, you will need to provide a letter of authorization allowing them to do so. We are now your advocates in the transaction and consider it a distinct honor and responsibility to be chosen by you for such an important task.
Step 2: Gather Information and Documents. Your lender will require that we submit a short-sale package which includes a variety of financial documents, such as tax returns and account statements, along with a hardship letter detailing why you can no longer make your mortgage payments. We will provide you with a comprehensive list of the items and documents needed. When the time comes, the package we submit to your lender will also include a sales contract with a buyer and an estimate of net proceeds from the sale of your home, based on that contract. Of course, we will assist you in preparing all of these documents and any others your lender requires.
Step 3: Price Your Home Effectively. Price is key! A critical element to short-sale success is setting a listing price that is just right - low enough to attract buyer interest and encourage a purchase-offer AND high enough to be acceptable to your lender. To find the right price, we'll prepare a Comparative Market Analysis (CMA), factoring in recent sales prices of comparable properties (including distressed, bank-owned and equity sales), current list prices for comparable homes and other relevant factors. Don't worry. We'll consult with you and help you find the right price to sell.
We'll list your property with photos and a description of its features on the multiple listing service and alert our network of contacts about the sale of your home. We'll also prepare a comprehensive marketing plan to give your home sale the widest exposure possible.
Step 4: Market Your Home To Potential Buyers. Our Premier Marketing Plan is well structured and has proven successful in selling short sale homes. We'll advise you on how to put your home in the best condition possible so as to attract a buyer quickly. The very minimum preparation of your home should include a thorough cleaning and removal of clutter and excess personal belongings that could turn off prospective buyers. We may suggest other improvements such as fresh paint, lawn/yard care, etc. to ensure your home appeals to buyers.
Step 5: Negotiate With Buyers. When a buyer makes a purchase offer, we'll negotiate the price and terms of the sales contract on your behalf. It is critical, at this step, to educate buyers about the short-sale process to ensure they have the patience and commitment to weather delays and complications -- and get to closing/settlement.
Step 6: Submit Your Short-Sale Package/Offer to Your Lender(s). We'll submit a complete short sale package with the offer and all required documents to your lender(s). If neccessary we will contact their foreclosure department to put a hold on foreclosure proceedings.
In evaluating your short-sale request, the lender will order an appraisal or a broker's price opinion (BPO), asking a knowledgeable real estate professional to render an opinion on the market value of the property (by looking at sold prices of comparable properties, the cost of making repairs and any other factors that might impact the property's value).
Assuming everything is to the lender's satisfaction, if the buyer's offer meets or exceeds the lender's net-proceeds requirement, chances are the lender will accept the short-sale offer and "forgive" the difference between the offer and the outstanding mortgage. A short sale approval will then be provided to us by the lender(s). If the buyer's offer is too low, the lender may contact us with a counterproposal. In this case, we would work to negotiate with the buyer for a higher offer.
Step 7: Negotiate With Your Lender(s). It is often necessary to negotiate the price and or net proceeds a lender will accept, refute a lender's assertion of current market value or negotiate release of deficiency judments and/or promissory notes. The finer points of short sale negotiation with your lender(s) are important to your future finances and credit and we vigorously protect our clients on all fronts.
Step 8: Fulfill the Terms of the Contract. Once your lender(s) approve the terms of your short sale, we will help you and your buyer stay on track fulfilling the terms of the contract, such as scheduling inspections, surveys, appraisals, etc.
Step 9: Closing/Settlement. If all goes according to plan, you'll reach the closing/settlement table to sign final documents transferring the property to its new owner and satisfying your obligation to your lender and providing you with freedom from negative equity and a fresh start.