The real estate market is rapidly changing. Unfortunately, one of the fastest growing segments of the real estate market is distressed home sellers.  Additionally, the distressed home seller has faced a difficult situation. Along with their distressed situation (foreclosure, divorce, inherited property, multiple house payments) they have no easy way of locating a real estate professional that is experienced dealing with their types of specific issues.  Until now.  We are here to help you!  Below we provide some general information.  Just realize that each situation is different and it is best to get questions answered for your specific situation.

Call is at (626) 339-0697 to help you figure out what your best options are.

The good news is that banks are working closer with home owners to help them stay in their home (1st and best option) and if that is not possible than to make a short sale as smooth and quick as possible.

What is a short sale:  a short sale is when someone tries to sell their house for less than what all the mortgages total for.  For example:  first and second mortgage on house total = $ 500,000 and the house in today's market will only sell for $ 375,000. 

The big part of this is the fact that all of the mortgage holders have to agree to the sale at the reduced price.  This is a process and can take anywhere from a few weeks to many months.  It just depends on the lender(s) that need to be dealt with.  Often, the original buyer will have pulled out long before the bank(s) approve the short sale.

The single biggest part of getting an approval is submitting a full and complete short sale package to the lender.  You have to ensure that you provide everything to your real estate consultant prior to submitting the short sale request.

Typically, to qualify you have to be behind in payments, have little or no equity in the property and have a legitimate hardship.  As part of the process be prepared to write an honest hardship letter, provide income and expense numbers as well as income statements.  Each lender is different in what they may request and your real estate consultant will work with you and guide you through the process.  Your real estate consultant will also have to provide information as part of the package.  Some of this will come from the contracts and some will come from an escrow company.  Let your experienced real estate consultant prepare the package.

Do not wait too long once you get in trouble and you have to sell your home.  The sooner you start the process the better you have of getting your short sale request approved.  Lenders do not like to postpone the foreclosure sale.  In our experience we found that the closer in the foreclosure process a home is to the foreclosure sale the less the chance of a short sale approval.  (This is somewhat changing even as we write this , because banks are realizing that it is better for them to take a short sale rather than deal with a foreclosure.)

Once the bank received a short sale request than it orders a Broker's Price Opinion (BPO) and or a full appraisal.  A BPO is a realtor's opinion of a home's value and a appraisal is an appraiser's opinion of a home's value.  These two can often be very different.  It is important to know or at least get an idea (banks do not like to release the actual figures they receive) of what the BPO or appraisal came in at.

If a completed short sale package has been submitted and the BPO and or appraisal have been completed the lender will assign the loan to a negotiator.  The reply to the short sale request will depend on this person.  Your real estate consultant may never be able to speak to this individual in person and may only receive a fax with the details of an approval or denial of the short sale.  Again, we can not stress enough on how important it is to submit a complete short sale package.  Any missing or incomplete items will cause delays or for the file not to be assigned.

When the approval is received than it is just a matter of completing the transaction as any regular sale.  The issue is that buyer that submitted the original offer will have gone and bought something else.  Most buyers do not want to wait weeks and months to hear of their offer was accepted and will move on to another property.  For this reason alone the property should be marketed and offers accepted until an answer is received on the short sale from the lender(s).  This way, once the answer is yes, an escrow can be opened at once and the transaction completed on time.

If you are a buyer looking to buy a short sale property you have to have great patience.  As stated above the process is long and can be drawn out.  Not because of the seller or agents but because of the time it takes the bank(s) to complete their review and approval process.  Your real estate consultant should be able to write your offer in such a  way that your deposit is not due until after the short sale approval and all the time lines start upon the short sale approval.  If this process sounds too long or you want to be in a home sooner that perhaps an REO property or a regular sale would be better for you.

Some Helpful articles:

http://www.latimes.com/business/la-fi-lew14-2008dec14,0,3851421.story?page=2

http://metrowestmarealestate.blogspot.com/2008/07/what-is-short-sale.html

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/30/BUIQ14C4F5.DTL

If you do not find the information you are looking for, just give us a call at (626) 339-0697, or send us an email and we will answer your specific question FREE without any obligation.