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Seller. Why do a short sale? Usually because the market won't support what you owe plus the costs of sale. The Implications for the seller can be very serious so I first want to disclose that if you are considering a short-sale, talk to your accountant and real estate attorney. The seller has to put together a financial package that shows the lender that they can't really afford to keep the house. There is some magic each lender uses to determine the sellers eligibility to be approved for a short-sale. Keeping that in mind , though, you should work with me to put the package that your lender will be looking for right away. The seller really needs a Realtor to help prepare the documents and work with the lender. This process usually can't even begin until the seller has an offer for the house. The seller accepts the offer and then gets the package together for the bank (or hopefully has already put it together with me). The Realtor will show where the market comps are and why it had to sell for less. In a declining market or if there is more owed than the market will support it is pretty easy to show this. The banks are getting more and more "user friendly" in regards to this matter. Once that the offer and all the documents are prepared the package is sent to the lender for approval. Once the lender receives the package they send it to the moon, back to Canada, and on to Mars before reaching the desk of a person who will put the package together for analysis. The whole bank approval process can take up to 3 months. In the meantime, everything can change and the seller (if not making payments) has a higher payoff than when it all started. Very frustrating for all parties involved. There are many advantages for you to do a short sale instead of letting it just go back to the bank. I can provide a list of reasons why your should do the short sale- just drop me a note. I'm not going to give a detailed class here, just a summation. Once the deal has been approved and the bank forwards the payoff to the title company and approval the regular details of inspections and appraisals for the buyer can begin. This is the way I write a short- sale offer. I don't want my buyers paying for inspections and appraisals until we know the bank will accept the offer. In my opinion, here are the two issues for a seller that need to be addressed. 1. What type of release will the bank give? The short-sale agreement will stipulate if the seller will be released from the short-pay amount or if the seller is still obligated to pay back the short pay amount. It is really difficult for a seller when the bank still goes after them for the amount that didn't get paid to them through the short-sale. 2. The effect all of this will have on the sellers credit. I can forward information about what one of the countries largest investors has said about the issue. I Just know that you may be much better off on your credit report if you have a short-sale. You really have to consider the total package about why you are having to sell in the first place and if other options may be better. BOTTOM LINE- make sure you work with an agent that knows how to help you through the process and knows how to market a short-sale. Patience is critical and education is the key. A sellers agent that can help educate a buyer' s agent prior to offer is going to have a better chance of completing the transaction.
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