For Sellers:  

 

If you have made your mind on a short sale, this is what will happen:

 

First of all here are the documents that you might need to put together, to be presented to your lender's "loss mitigation" department. 

    1) Loan Statements your lenders. If you have more than a loan, you'll need them all.

    2) Sale and Purchase Contract in an approved "as-is" Realtors form

    3)  Letter of Hardship

    4) Two months of borrowers' bank account(s)  statements

    5)Two months of borrower (s) Pay Stubs

    6) Two Years of Tax Returns forms (1040)

    7) Borrower's Personal Financial Statement (Assets & Liabilities)

    8)  Listing Agreement that you  have signed to your listing real estate agent

    9)  2 Active and 2 Closed Sales Comparables, provided by your agent

   10)  List of repairs in your property, if needed.

 

The Short Sale itself should go on as follows:

 

  Of course, we are assuming that you have already met with your real estate agent, accountant, tax advisor,  to determine if a short sale is the right decision for you and your family.  At this point:

 

1. You sign a listing agreement with your agent and he places  your property on the Multi-listing system (MLS).  You authorize your agent to use the services of a short sale specialist or short sale negotiation company. You authorize the use of a lock box and, if needed, a real estate sign to be placed on your property. 

2.  The negotiator will contact your bank/lender to determine the requirements for a short sale.  The negotiator we use is a well know national corporation, specialized in this type of transaction. 

3. The lender requirements are given to you so you start putting together the documents.

4. Your agent starts showing your property, eventually  receiving an offer.

5. Your agent assembles your short sale package attaching it to the executed sales contract.

6. The lender receives the full package, and orders a Broker Price Opinion (BPO) or an appraisal.

7. The lender reviews the BPO or appraisal. The negotiations start between the lender and the negotiator.

8. The bank responds by either approving the short sale, indicating that he would approve it with a higher sale price (that they can disclose),  or  plainly disapproving the sale.

9. In the last two cases, the buyer should react by offering a higher price.  If this doesn’t happen, your real estate agent puts the property back on the market at the bank's requested price, if they know it.

10. Upon approval by the lender of a sales contract, the transaction goes into escrow, and the closing can occur in a short time. Often in two weeks, while the title work is being completed.

11. The negotiator should address, if it hasn’t been done previously, the issue of the deficiencies between the lender and the seller. He usually tries to get the most favorable settlement for the seller, and the intent is to eliminate as much as possible any future liability. In a few words, get the lender to "forgive" the loss that it has incurred.

12.    At this time, new issues can arise. A second mortgage lender might be an issue to address by the negotiator; a condominium or owners' association debt that should be taken care of, or any other lien that is in the way of a settlement.

13. If every issue is addressed and satisfied, the closing will happen

This is just a tentative diagram of a common short sale. Every case, however, is different and must be handled accordingly.