Thinking About a Short Sale? Many if not most people in our country have been adversly affected by the current economy or know someone who has. Short Sales became popular in the early 90’s when we experienced a very similar market shift as we have currently. A Short sale simply means that the bank or bank(s), hoa, or even judgement or lienholders are accepting a payment on the collateral for less than what was originally agreed to.The Bank or bank(s) will accept a sales price that is current market value as opposed to the amount loaned.
What are the considerations?
Do I go late on my payment? Only if you need to. It is far better for your credit if you do not go late on your payment however your credit will be affected negativley. In many cases that is not possible but it definitely will prevent you from purchasing again for at least 2-3 years.
Buy Again RIGHT AWAY After Short Sale? It is possible to purchase again right away after a Short Sale in certain situations. If the orginal loan was a conventional loan then it may be possible to purchase again using an FHA loan. In order to qualifty for this new loan the credit must be meticulolus and the circumstances for the Short Sale must not reflect the borrower trying to take advantage of the market place.
SHORT Sale and Lease Back? There are programs that offer a seller an opportunity to stay in their home and lease back for three years with an opportunity to re-purchase the home. This requires a seller to put option money into the deal up front . The purchaser of the property is a non-profit agency.The terms to re-purchase will be set up front.
How long does it take to Short Sale? Once listed, a Short Sale can sell in 1 day or 100 days depending on supply and demand and the current pulse of the market. The Short Sale process itself can take 45 days or a year or more in some cases depending on the lender. Short Sales are not a science!! Remember Short Sales are only called Short Sales because the bank is accepting less than what is actually owed on the property, it does not have anything to do with the amount of time it takes to actually close a Short Sale.
Short Sale Process- The Smoothest Short Sales begin with an agent who knows what they are doing!! SERIOUSLY!! An experienced Short Sale Agent will price the property correctly so as to not waste time and review the offers with the seller in order to chose the offer that is the highest net to the bank AND equally as important … the offer that is most qualified AND with a buyer who understands they need to hang in for the long haul!! A seller will need to have pulled together all of the documentation required to obtain the loan in order to unwind the loan. Taxes for two years, bank statements for two months and two paystubs. An authorization will need to be signed allowing the agent or negotiator to speak with the bank or bank(s) on the sellers behalf. Lastly but certainly not least.. the seller will need to write a letter of explanation showing the reasons for the Short Sale. An experienced Short Sale agent will help with writing the letter. This is an important piece to a successful Short Sale.
Submitting Package to Bank- In most cases the offer for the property needs to come first then accompanied with all of the seller documentation it is submitted to the bank or bank(s).
This starts the Short Sale approval process. The bank will respond asking for more documentation or approve the Sales Contract or Counter the offer that was submitted. Once the Short Sale is approved by the bank then Escrow is opened and the actual Escrow period begins. There are exceptions.. Some banks want the package to be submitted prior to the property going on the market as they will supply a list price up front they will approve. This doesn’t happen in most cases but when it does the actual approval process is expedited!!!!!!!!!!!!!!!!