The Short Sale

writershirley lopez By writershirley lopez, 28th Mar 2015 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Money>Mortgages

Short sales take place all across America because the owner has an unexpected hardship like death, divorce, loss of work, or injury that cuts into the income and they are no longer able to make payments on the mortgage. The steps involved are very important to make sure the sale goes very smoothly. This is a time consuming process so it is important to know the proper steps as well as having a good agent to represent you.

The sellers guidelines

When a home owner has a hardship like losing their job, major medical bills, divorce, bankruptcy or a death that prevents them from paying their home then a short sale is necessary. There are steps to take in order to do a short sale but often it is necessary for the home owner. The bank will usually allow the short sale if one of the hardships prevents them from making the payments and there is not enough equity in the home to pay off the mortgage after the costs.

The banks have their own individual guidelines so it is necessary to find out what your banks guidelines require of you. Most banks do require the following for your short sale package.

• First you should begin with a letter of authorization for your agent to do business for you at the bank.

• Next you will need a preliminary net sheet or a HUD-1 in your package.

• A financial statement is necessary in order to prove your hardship status.

• Then you should also include a hardship letter stating your status of why you need to do a short sale.

• Normally the bank will want two or three years of tax returns and W-2’s.

• The last month’s payroll stubs is very helpful especially if you have lost your job.

• A death certificate of the party who died if that is the problem.

• Payroll stubs are very important and should be included in your package.

• If at all possible include a Comparative market analysis sheet or recent sales of property in your area.

Making the Short Sale Offer and Submitting to the Bank

Banks do not like having to release a mortgage at the lowest price instead they want something that is closer to the market value. Remember this when you are placing your home on the market. The short sale price may not be at market value but below the market value in order to entice multiple offers from different people. This is very important so you can get the best price possible for your agent.

The Agent needs the following to present to the bank

1. The listing agreement is important for the bank to know you have tried to get the best price possible.

2. The agent will need to prove that you have executed the purchase offer.

3. The person who you have selected to do the short sale with will need a letter of approval, proof of earnest money and proof that the buyer has the funds.

4. The agent will need all of the information you put together in your short sale package. It is very important that all the information is complete in order to prevent any delays.

When these things are completed and turned over to the bank then you must wait until the bank has their process before you get an answer.

The Bank Now has Control of the Short Sale Procedure

Unfortunately buyers may have a long waiting period before the bank gives a response. The agent working for you should contact the bank on a regular basis making notes on the way the short sale is going. It is up to the agent to work with the buyer so they do not get discourage and be tempted to cancel because of the lack of an answer on their bid. Try not to get involved with a buyer who does not have patients as they need to understand that this process will take some time.

The Process at the Bank for the Short Sale

Most banks have the following process to complete your short sale however, this process could vary in time.

1. The bank will let you know that they have received your complete file. The time period for this could be ten days to a month.

2. The bank then assigns a negotiator to your account but this again could take a week up to about 60 days.

3. It is necessary to order a BPO but the bank will not share this information.

4. At this point a second negotiator will be assigned to your case which will take another thirty days.

5. Your file is now sent for review which takes approximately thirty days.

6. Some banks require that you sign what is called an Arm’s-Length Affidavit.

7. You will then receive a short sale approval letter if everything is in order.

8. Your buyer may have canceled by that time and if that is so then you will need to sell your home again. This happens to many people and they find that they have had to resale their home three or more times.

Do not get discouraged some short sales can be completed within two to eight weeks. While others take from 90 to 120 days. The time period for a short sale depends on the investor most of the time instead of the bank. Your listing agent will generally have an idea of how long the short sale will take. The buyers generally want to start their own loan process in case your short sale is completed within the two week time period.


Agents, Banks, Bids, Buyers, Process

Meet the author

author avatar writershirley lopez
Enjoy writing blogs and website landing pages for over 50 years. A retired grandmother who enjoys writing in a variety of topics, funny stories, serious news, medical, legal. family, and religious.

Share this page

moderator Steve Kinsman moderated this page.
If you have any complaints about this content, please let us know


Add a comment
Can't login?