![\"\"](\"https:\/\/davidpittsrealestate.com\/wp-content\/uploads\/2017\/03\/foreclosure-sign-300x143.jpg\")
<\/p>\n<\/p>\n
What is a Short Sale?<\/strong><\/p>\n A short sale occurs when a lender agrees to accept less than the full balance of the amount owed in order to release their lien on real property. Short sales have become a popular solution for homeowners who wish to sell their property but owe their lender(s) more than their home is worth. You may want to seek legal and\/or tax advice before initiating a short sale. These usually pertain to late payments. Your account will be shown as settled which is not as severe as credit implications arising from a foreclosure of your property. Buyers and Sellers<\/strong> Advisable not to allow pre-occupancy or rentbacks Patience and Persistence\u2026<\/strong><\/p>\n It is recommended that the Agent follow up with the lender(s) every 2-3 days to see how things are moving along, even if they tell you not to call that often. Additional Information for Buyers<\/strong><\/p>\n Ask your Agent to interview the Listing Agent to make sure they know what they are doing. Important questions to ask: IF YES: Do you have all of the required documents from the seller to submit to the lender(s)<\/p>\n IF NO: Has the lender(s) done their appraisal? Call me at the beginning of the problem I can help if you reach out to me early in the process.<\/p>\n Call me at 508-930-1613 or fill out this form and I’ll contact you asap.<\/p>\n
\nSellers<\/strong><\/p>\n
\nIf you are interested in pursuing a short sale, you must document your financial hardship. You must be able to prove to your lender that a situation exists making you unable to afford your current mortgage payment, your current income does not allow you to afford your monthly payment, or you are financially distressed.
\nPossible outcomes of an approved short sale include, but are not limited to:<\/em>
\nYour Lender will issue an IRS Form 1099-C reporting the amount of debt that was “forgiven”, which may be taxable.
\nYour Lender may accept an amount to release the lien but keep the account “open” to charge off or send to collections; meaning you remain personally liable for the unpaid balance.
\nYour Lender may seek a deficiency judgment against you for the unpaid balance.
\nYour Lender may require that you bring some funds to closing; and\/or require that you enter into an unsecured loan.
\nThere may be credit implications-<\/em><\/p>\n
\nLenders will want to see financial records (i.e. bank statements, paystubs, tax returns etc.)
\nLenders will perform an appraisal to determine fair market value and will reject “low ball” offers. Therefore, the property should be listed at market value.
\nContact your lender(s) to:
\nGet a fax number for their short sale and\/or loss mitigation department.
\nObtain\/submit Third Party Authorization form allowing your Agent to help monitor the status of your loan and communicate with the lender(s) throughout the process.
\nMonitor loan status until closing.
\nContact Me as early in the process as possible. We will:
\nOrder loan payoff(s)
\nGet HOA Dues and County Property Tax status
\nOrder prelimary title examination to verify any liens filed since your acquisition of the property.
\nPrepare a preliminary Settlement Statement for your lender\u2019s review\/approval.
\nAdditional pertinent information<\/em>
\nHave you received foreclosure notices?
\nAre you currently in bankruptcy?
\nAre you U.S. Citizen or resident alien?<\/p>\n
\nCOMMON TERMS OF A SHORT SALE CONTRACT<\/p>\n
\nThe property should be sold in its “AS IS” physical condition as of the contract date. Be sure to use the appropriate contract addendum.
\nHome Inspections at Buyer\u2019s expense and should be for informational purposes only
\nTermite Inspection\/Treatment and repairs at Buyer\u2019s expense
\nWell and Septic Inspections and repairs at Buyer\u2019s expense
\nHome Warranty paid by Buyer
\nFinal Walk-Thru permitted for convenience but not for additional negotiations
\nMust show Third Party Approval required- Use the appropriate contract addendum.
\nA contract is ratified once it is signed by the seller and buyer. Third party approval is only a contingency as the lender(s) do not sign the contract; they provide their own separate approval of the terms of the transaction.
\nAvoid use of electronic signatures. “Wet-ink” signatures\/initials are required by most lenders.<\/p>\n
\nUpdate Selling Agent and Buyer at least once a week. Communication is imperative.
\nLender(s) will assign their files to a negotiator approximately 2-4 weeks after the package is received. This person will handle the file through the approval process.
\nLender will order their own BPO (Broker Pricing Opinion\/Appraisal). They may counter the contract offer based on the value of the BPO.
\nApproval\/denial usually comes within 2-6 weeks of BPO approval.
\nThe average turnaround time for approval or denial is 45-60 days. However some have taken significantly longer.
\nCarefully review all terms contained in the approval letter from each lender before settlement.<\/p>\n
\nHave you handled many or any other short sales?
\nIs there a 1st and 2nd lien on this property? Are they with the same lender?
\nHas a preliminary title search been done?
\nHave you checked the seller for bankruptcy?
\nHas a foreclosure date been set?
\nIs this the first contract on the property?<\/p>\n
\nDo you have an estimated timeframe that you expect to get approval; or were you on the verge of approval when the last contract fell through?
\nExpect the lender(s) to counter your offer
\nPatience is a must on short sale – it can be a slow process. If you are in a “have to move” situation, then a short sale is probably not right for you.
\nSuggested Terms in the Contract<\/strong>
\nBuyer reserves the right to cancel contract at any time prior to 3rd party approval
\nConsider delaying other contingencies (appraisal, financing, etc) until 3rd party approval is received
\nIndicate earnest money deposit will be given and deposited upon 3rd party approval.<\/p>\n
\n<\/strong><\/p>\n\n