What is involved in a short sale?

Question: What is involved in a short sale?

Answer: -This is a great question…the short sale process involves several steps.  First the homeowner falls behind on payments because of some hardship or challenge and can no longer make payments.  The house is over leveraged, so the loans are more than what the house is worth, so it makes it near impossible to sell.

If you are the homeowner, here is what is now involved in a short sale…

Homeowner – Buyer/Investor/Agent approaches you to buy your home for less than what it’s worth.  You have to concent or authorize buyer to talk to lender about loan(s).  You will fill out some paperwork describing your financial hardship, describing your current financial condition, and most likely you’ll also provice some pay stubb’s if you’re employed, bank statements, W2′s, etc.  You will be asked to cooperate fully with the buyer to get the short sale pushed through.  Once the offer is accepted, you’ll have to sign some more paperwork basically disclosing to you the terms of the short sale agreement and you’ll go to closing and be done.  Then you’ll have to move out of your home if you haven’t already.  Then the bank will either 1099 you for the difference they lost or they can file a deficiency judgment against you.  But a good short sale expert can eliminate the whole deficiency judgment option all together, so really you just have to worry about the 1099.

If you are the buyer or investor, this is what is involved in a short sale…

Buyer/Investor – First you will fax the authorization letter to the bank, the homeowner just signed and wait 24 to 48 hours.  Then you will request a “short sale” or “workout packet” from the bank.  In the packet will be everything the lender requires in order to accept a short sale.  Fill it out completely and make sure you include everything the lender requires.  Once everything is filled out, send it back to the lender and start looking for an end buyer.  If you already have your list of buyers, call them up and let them know about your deal.  You’ll use wet funds to close your deal and sell the property to your end buyer.  You make your money and do it over again.

Leave a Reply