Is anyone confused as to what a Short Sale is? Let me explain...

What is a Short Sale

     I know some of you are confused about what a Short Sale really is.  Some people may have told you that Short Sale indicates that the escrow will be a short one. That it will be a quick process, and that the banks would like to get rid of the homes quickly.  Some also have mentioned that they have received advise to 'stay away' from Short Sales. That the previous home owners have damaged the property and they just are not good investments.
Well, I am here today to help you better understand, what is all entailed, what you can expect and hopefully give you a better understanding of the entire process.

Lets just say, you own your home and the loan amount still owed to the bank is $200,000 and lets say you have lost your job, or have been injured or something unexpected has come up in your life that is keeping your from making your regular monthly mortgage. Lets also say you've spoken to a Realtor and they have told you that your home, is now only worth 125,000. At this point, your options are to let the bank Foreclose on the home, or Short Sale it.

In basic terms, a Short Sale is where the bank would come up short on the money owed them.  They would need to approve a sale of $125,000 and 'forgive' the remaining $75,000.

In most situations, here is how the process works.
1. The owner calls the bank and requests a Short Sale package.
2. The agent does comparable of the homes that have sold in your neighborhood and determines value.
3. The agent then 'lists' the home on the MLS and waits for an offer.
4. The agent starts to collect items for the Short Sale from the owner, these items include and are not limited to.
     a. Last two years tax returns
     b. Two of your most recent bank statements
     c. Letter of explanation (a letter stating WHY you are short selling your home)
     d. Two most recent Pay stubs
     e. letter of authorization ( a form you sign giving your Realtor permission to speak to your bank, so they can work on your behalf)
    f. Financial Statement (this will come in the short sale package)
    g. W2 (in applicable)
    h. Utility bill with your name on it and the home address. (if appliciable)


After you have accumulated all of these documents, and receive an offer, your agent will submit everything to the Short Sale department of your bank, and we wait!
Once the Short Sale department gets a chance to open your file, they will approve or deny your application. If they approve it, they will call for an appraisal to be done on the home.  The appraiser goes out and finds value and reports back to the bank. The bank then looks at the appraisal and the 'offer' and decides they can take the loss.
If it is determined that they will, the bank will either accept the 'offer' form the buyer, or 'make a counter offer.'
Once the bank and the buyers come to an agreed amount, the bank will issue an 'acceptance' and escrow can open!
There is no easy way to explain this process, hopefully this will help.  Please call us with any questions or to Short Sale your home.  We will walk you through this process, and make it as stress free as possible.