Handling a Short Sale for a client is a very complicated and detailed process, but at its core, there are only a few basic steps involved. The real success of the Short Sale is attributed to the experience level of the agent representing the seller. If they don’t know what they’re doing, it’s likely you won’t have a very smooth transaction. In fact, if they are attempting to short sale your home without experience, then they are doing you a disservice, as its our fiduciary as Realtors to represent your best interests, which cannot happen without proper experience.
Short Sales Process at its Basics
Listing: The first step is to list the property for sale. Traditional marketing does not typically apply to short sale properties because we’re pricing it to sell as quickly as possible. The seller doesn’t make any money, and they don’t approve the sale, so essentially, the seller really isn’t the seller. The bank is ultimately in charge.
Offer: A qualified buyer presents an offer. Just like any other sale of any other property, ensuring the buyer is adequately qualified to actually purchase the home is just as important on a short sale as a normal sale.
Execution: The seller signs the contract. Provided the offer is within reasonable fair market value of the comparable sales in the neighborhood, when the offer is presented, the seller will sign it and it will be considered executed or “accepted,” but not “approved.”
Submit to Lender(s): Along with all of the required documentation, the offer and all associated listing paperwork, addenda, financial statement, etc., is submitted by your Realtor to the lender(s) on the property and the approval process begins.
Receive Letter of Agreement: When the lender approves of the sale, meaning they’re taking what they can get from the deal, they provide a letter of agreement which the seller reviews and approves or disapproves of. If the seller agrees to their terms, the normal closing time line begins.
Due Diligence: It’s now time for the buyer to conduct their inspections and obtain their funding. If everything checks out okay, and the property appraises for at least the contract purchase price, then the buyer moves on to the next step.
Signing: Woo hoo! This is where the buyer signs their final paperwork. Title will then record the property transfer with the county recorder and the new buyer will take ownership of the property.
That’s it. Those are the basic steps of a short sale. From start to finish, this entire process is completely dependent upon how cooperative each party to the transaction is, and no two short sales are the same. This entire process can take a few weeks, to more than 8 months. So, as a buyer or a seller, be prepared to wait.