Short Sales: Listing to Close

Hello all my rainy day loving friends! Here's the scoop on the Short Sale Process:



1)There is a current hardship (e.g. loss of job, decrease in salary, divorce) that is making it difficult to impossible to pay your mortgage (you do not need to have missed any payments to start this process)

2)You choose a real estate professional experienced in the short sale process. The realtor should know the process and be able to provide answers to faq's and not be afraid of the time involved with this type of sale (short sales typically require 60 days after an offer is received for the bank to approve or counter the short sale, which requires weekly, often daily calls from your realtor to the bank).

3)The home should be marketed as a standard listing (virtual tour if possible, flyers, signage, internet exposure), just because the commission is usually reduced by the bank, the agent you choose should still provide full service, make sure you confirm this when hiring your agent.

4)The listing agreement you sign will be submitted to the bank and typically it will be for customary commissions, this is due to the fact that the commissions are not set until the bank sets them when they approve an offer and typically the bank will discount the commissions based upon their protocol. The bank pays all commissions, costs, taxes etc. for closing. As the seller involved in a short sale, you typically will incur no costs for closing but you will not gain any proceeds either. That's the tradeoff.

5) You will need to submit a "sellers short sale package" to your lender(s) and your agent can provide a list of items needed and will also require that you authorize them on the loan account so that the bank will speak to them. Your agent will not be allowed to amend your loan terms. If you would like a copy of the items needed for the sellers short sale package, shoot me an email and I will forward the list and details to you.

6) After the package is submitted, the bank will not take any action until an offer is received. Once an offer is received the bank will order an appraisal. Typically we are seeing banks take 60 days or more to approve or counter an offer. You will submit only one offer to the bank per California State Law.

7) Once the bank approves the offer, the buyers time periods begin and they will then complete their inspections and appraisal if that is called for in the agreement.

8) Buyers will release their contingencies per their contract and then the sale will close. You will go to the escrow company to sign off any documents and at that time you will either sign the banks approval letter stating that the debt is forgiven or cancelled or if you have pulled equity out of the house you will most likely be signing a promissory note between you and the lender that will address any $$ pulled out of your equity after the home was purchased.

That's the nutshell. There are a lot of people currently looking at short sale options. Please contact me directly if you have questions about your specific situation.