Understanding The Short Sale Process
Most lenders have a pre-defined short sale process and, in fact, only their documentation varies from lender to lender. The actual short sale process is sometimes complicated for homeowners to understand especially in their emotional state of mind. The not knowing what is happening or how long it will take to complete the short sale combined with the uncertainty of the final outcome can be maddening.
The basic short sale process follows the “life cycle” as described below:
The homeowner has tried a loan modification or deed in lieu of foreclosure with his lender directly and was unable to get approval or get a satisfactory offer from his lender.
The homeowner makes a conscious decision to do a short sale instead of allowing his home to be foreclosed because of the lesser impact on his credit report and credit history.
The homeowner contacts his lender and asks for a short sale package which the lender will send out in a few days to start the short sale process in writing.
The homeowner begins filling out the required lender documents and starts looking for a buyer from individuals who have likely contacted him since his name appeared in the public record because he is in foreclosure.
The homeowner can choose to try to complete the process of the document preparation by himself or he can have help from a prospective buyer, an attorney or real estate agent.
The homeowner must establish a reason for the short sale which is a personal hardship, of which there are many, for the lender to proceed with the short sale. Simply no longer wanting the home is not a hardship.
The homeowner will sign a Purchase and Sale Contract with a buyer and a listing agreement with a licensed real estate agent (Realtor®) since the lender needs the property listed and a purchase contract to move forward with reviewing the short sale process request. The final price approved by the lender may not be the purchase price the homeowner agreed to on the contract.
The homeowner continues to comply with requests from the person processing the short sale for all documents needed to complete a submission package. Otherwise the lender’s rep will not take the package in bits and pieces – a complete short sale package or nothing at all.
The homeowner waits for the final price approval and conditions that the lender will accept for the sale of his home which can take from a couple of months to over a year in rare cases.
The homeowner comes to a closing at a closing agent’s office where he will sign over his home (via deed) and turn over the keys to the property to the buyer.
It is critically important that a homeowner read the lender’s Approval Letter and its terms to make sure he has been forgiven for the deficiency amount the lender has not received from the sale of his home.
The most important aspect of the the short sale process is to make sure the home owner understands what can happen if they are not forgiven for the deficiency amount because it can follow them for years.
If the homeowner chooses to just avoid all of this it would take a cash buyer to take over the property and leave the homeowner free and clear. At HomeSolutionsFLA, we are a cash buyer. Contact us either by phone or the contact form below and let us give you a no obligation offer.