What a Short Sale is and How the Process Works
A short sale is a viable option for a homeowner when the amount owed on a property exceeds the current market value of the property. In other words, when there is no equity (or not enough equity) within the property to fully pay off the lender and cover the costs of completing a traditional sale.
One of the primary benefits of a short sale is that often it allows the homeowner to stay in the property rent free during the entire process, which can take anywhere from as little as 3 months to as long as 2 years in some cases. This allows the owner to save funds, plan their next move at their pace, and equally importantly, prevents a full foreclosure from appearing on their credit report.
A short sale typically involves the following steps:
1. Meet with a licensed Real Estate agent who has short sale experience and who can provide a comparative market analysis to determine the approximate current market value of the property.
2. Sign a listing agreement and list the home for sale on the open market.
3. The agent and homeowner contact the lender who is foreclosing on the property and requests a short sale and a postponement of the auction/notice of trustee sale.
4. The agent negotiates directly with the lender on the homeowners behalf, and works closely with the homeowner to provide the lender with any requested financial information to prove that the short sale should be accepted.
5. Potential buyers submit purchase offers for the home, and the agent presents them to the homeowner and to the lender for acceptance and approval. Since the lender is losing money on their original loan, they will want to ensure they are receiving the best offer possible.
6. Once a purchase offer is accepted, a purchase agreement is drafted and signed by all parties, and the property is moved into escrow.
7. The title and escrow process can take anywhere from 2 weeks to 3 months, depending on what items are found in a preliminary title search.
8. Once clear title is obtained, the property closes escrow, the home is sold, and the seller/homeowner vacates the property.
Each lender is different in their short sale requirements and procedures, thus it is important to choose a real estate agent that has extensive experience working with a wide variety of lenders, and who knows how to speak the lender's language to ensure the highest chances of the short sale being accepted and approved.
Some lenders may also offer the homeowner financial assistance for relocation, and an experienced agent will know how to negotiate with them to obtain that and all possible benefits on the homeowner's behalf.
With more than 150 traditional real estate home sales in Southern California, and more than 250 short sales successfully negotiated and brought to closure, we’re one of the few specialized organizations out there that not only helps homeowners utilize every no-cost option available to keep their home, but that also helps resolve the foreclosure and home sale in their financial favor if all other options have been exhausted.
Whatever the case, we will steer you in the right direction. If your goal is to keep your home, we will do everything possible to bring that goal to fruition. We use proceeds from traditional real estate and short sales to help fund the department that provides no-cost services to homeowners for foreclosure prevention and resolution. Our ultimate goal is to reduce the amount of foreclosures that occur, prevent homeowners from being taken advantage of by unscrupulous individuals and fake homeowner assistance organizations, and to educate homeowners about the legitimate options they do have.
If you have any questions, or want to discuss the unique situation you are facing, give us a call, or send us a message. We’re here to help.