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Step 1
The key to having a successful short sale is the knowledge of knowing how the process works. The property has to be on the market for 90 days before the seller is eligible for a short sale. In these 90 days the seller will fill out the short sale package and sign an authorization form for the Realtor to speak with a bank representative. Once this 90 days process is complete the bank will in turn notify the seller if they are eligible for the actual short sale. (Providing the sellers package has been completed).
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Step 2
In the 90 day time frame the bank will have a loss mitigation specialist assigned to the seller. Once an offer is received on the property, the bank will go over the net sheet (sellers’ proceeds), order a market value of the property and then assign the property to a negotiator for the bank. The property must come within the value of 10% of the market conditions (appraisal, competitive market analysis, BPO, broker price opinion) or the bank will not accept the sale and calls will go unreturned to the sellers’ real estate agent. This makes it very frustrating. I cannot stress enough that buyer agents’ need to understand this simple rule or both the agent and the buyer will be wasting their time. Some listing agents have never done this kind of sale, no matter how long they’ve been in the business, and this can also make it very difficult to get a response to the offer. (Not only do you need to make sure that your agent has the knowledge, it is very important for your agent to make sure that the selling agent has the knowledge as well. Otherwise the property will never close.
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Step 3
Some short sale properties are current on their payments, while others are in pre-foreclosure. Depending on the owners situation can greatly affect the process.
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Step 4
After negotiations with the negotiator, the closing can take place in as little as two weeks. Please note that although loss mitigation may have the agent feel there is an accepted offer. The offer is not fully accepted until the negotiator accepts the price; they can and have asked for more money after the buyer thought they were getting the property for a specific price. Rule of thumb for making short sale offers as a buyer:
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Step 5
1. The property must be on the market for 90 days. Some banks may negotiate sooner.
2. The title work must be ready when submitting the offer to the bank.
3. The bank will require a net sheet or HUD 1 form with the offer.
4. The property must fall within 10% of market value (this includes commissions, closing costs to the seller, proration of taxes, and any other fees that may apply.
5. A whole lot of Patience! -
Step 6
Insight to property descriptions:
Possible Short Sale: Has not been approved by the bank yet, could take several weeks or months before closing.
Approved Short Sale: The seller has met the requirements to sell at a reduced price.
May Consider Short Sale: The seller has made no attempt with the bank to negotiate the short sale. They will have to pay the difference from what is owed on the property to what the property nets after considerations.
