Many homeowners have probably heard the term “short sale” once or twice, but do you really know what it means? More importantly – Do you know what it means for YOU? A short sale can be a pretty great thing if your struggling with your mortgage payments. Below is a clear description of what a short sale really is & how long the entire process can take.
Short Sale – A work out program that allows the customer to sell the home for less than total amount owed. Upon final approval, a short sale can help homeowners avoid further collection activity or foreclosure action.
How does it all begin?
There are some guidelines that do need to be met. The listing agent must send a complete short sale package & fully executed listing agreement.
Along with what the agent sends, it is crucial that the homeowner sends signed and dated financial worksheet with all monthly expenses, A signed and dated hardship letter explaining why they are unable to pay their mortgage, An Authorization letter allowing access to the Realtor for all account information. This authorization letter must include the last 4 digit’s of homeowners social security number, their signature, the full account number & the property address.
There is no deffinite time line for short sales. Some could only take a week and others could take months. But here is the average amount of time an agent could base it on.
Complete short sale application received 1-2 Business Days
Short Sale application activated 1-2 Business Days
Complete application assigned to a negotiator 1-2 Business Days
An incomplete application will DELAY the process – 2 Business days
For the negotiator to initially review the application – 5 Business Days
Introduction Call to Realtor & Homeowner – 5 Business Days Property
Evaluation completed (Appraisal or interior BPO ) – 8-13 Days
Mortgage Insurer Approval – 10 Business days
Investor Approval – 10 Business days
Additional Liens negotiated by Realtor – 10 Business Days
A completed net sheet/HUD – 10 Business Days
Fully executed purchase contract with all pages initialed by buyer & seller – 10 Business days
Buyer Pre-qualification letter or proof of funds if cash offer – 10 Business Days
Application Decision – 2 Days
Decision Letters Issued – 2 Days
All in all – the average complete time line for a short sale from beginning to end – is approximately 25 Days. (Give or take)
* Short sale approval is good for 30 days. If closing does not occur within those 30 days, the entire short sale package may need to be resubmitted with updated information, or the approval process may need to start over.
* Realtor or Homeowner questions should be directed to the negotiator assigned to the file, whose information will be communicated during the introduction call.
* Realtors are generally allowed 5-6% Commission. If dual agency applies, maximum commission is 5 % . Some investors operate on a reduced commission structure & the actual commission schedule can also be confirmed during the introduction call.
* Short sales must always be an “arms length” transaction. The property may NOT be sold to anyone the seller has a close personal or business relationship with, including family, friends, or neighbors.
*** In order to reduce the time the short sale process takes, the homeowner should reach the mortgage company & let them know of their intention to sell their property as soon as the listing contract is signed. This will allow the mortgage company to complete the property valuation & borrower financial evaluation prior to receiving an offer. This significantly reduces the short sale decision time on a submitted offer.
* In some cases investors require the mortgage holders to sign an unsecured note for some or all of the difference between the net proceeds from the sale and the total amount due. This is not common, but can indeed happen. This is communicated as part of the response on a short sale offer.
Hope this helps! If you have any questions or would like more information on short sales – please never hesitate to contact me.
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Glen Russell 610.792.3000
