Several times weekly, I am asked to define what a Short Sale is, how the process works, where to find Short Sale, how to start a Short Sale, and more, so I prepared the following information for your use as Sellers interested in selling a Home as a Short Sale or as Buyers interested in purchasing a home sold as a Short Sale. The following information is NOT comprehensive, but is intended to provide you with basic, important details regarding the process.

Interested in buying a Short Sale?  Click here for detailed information.

What is a Short Sale?

A completed Short Sale occurs when a Lender agrees to accept a Purchase amount for the Home (from a new Buyer) that's less than the Mortgage amount owed by the existing Owner. HOWEVER, please note that just because a Home's value is less than the existing Mortgage amount does not mean that the Homeowner will automatically be approved for a Short Sale. Read below for details.  

 IMPORTANT POINTS FOR SELLERS

  1. DO NOT AVOID CONTACT with your Lender. The Clock is ticking. Do not delay listing your Home for Sale. At this point, your goal is attempting to find a QUALIFIED BUYER who will place an Offer on your Home, have their Offer approved by the Lender, and complete purchase of your Home before the Bank repossesses it.  Your Lender will require a Listing Agreement with a Broker as evidence that you’re actively marketing your Home for Sale and seeking a Buyer.

  2. Unlike a regular Sale where you're responsible for paying Broker Commissions for the marketing of your home, that is typically not the case with Short Sale Listings. Brokers & Agents are paid BY THE LENDER from the proceeds they receive from the Buyer for the purchase of your Home except in cases where the Lender approves you for a Short Sale, but determines that you’re financially of contributing some Funds at the time of Closing, in which case, your contribution could possibly include payment of Commission and/or partial payment of the outstanding Loan Balance, etc.

  3. The List Price of your Home should not be based on sentimental value or the amount of money that you’ve invested in the property.  I will provide information about the recent purchase prices of comparable/similar Homes in the area and suggest an appropriate List price.  Although you have to approve the amount that the Property is listed for, the decision about the price that will be accepted for the purchase of the Home will be the Lender's decision, NOT yours.

  4. The Lender will order a Broker Price Opinion (BPO) which they use to determine the current Market Value of the home. The Lender will use the BPO to determine the purchase price that they will accept from the Buyer. 

  5. If you're interested in negotiating a Short Sale, you must complete a Short Sale application through your Lender WHEN you receive an Offer for the purchase of the Property, not before. The Short Sale Application package includes items such as the Listing Agreement showing that you're actively marketing your Home for Sale through a Broker, Tax Returns, Financial Statements, W2s, Homeowner or Condo Association Lien Status Letters, and a Hardship Letter.

  6. Every Lender will require that you provide documentation of your Hardship (in other words, the Lender will require that you provide a written explanation of why you're unable to continue making your Mortgage payments) and the Lender will determine whether the Hardship you explained meets their criteria of "Hardship" or not. Simply owning a Home that's worth less than your purchase price is not sufficient hardship. A few examples of Hardship include Payment Adjustments (such as Adjustable Rate Mortages--ARMs), Family Illness, Death, Unemployment, Divorce, Separation, Military Service, etc.

  7. In reviewing your Income, Assets, and Hardship, the Lender will determine if you qualify financially for a Short Sale.

  8. Other items that can affect the sale of your home include delinquent Taxes, delinquent Association fees, various Liens, etc.

  9. The Lender will not allow you to receive any profit from the Short Sale.

  10. Your Credit Score WILL be decreased by a Short Sale, although your Credit Score decrease for a Short Sale is typically less than the Credit Score decrease experienced in a Foreclosure or Deed in Lieu of a Foreclosure.

  11. If you receive a qualified Offer for the purchase of your Home, the Offer will be submitted to the Lender along with your Short Sale Application package.

  12. Carefully evaluate if you absolutely must sell your home. Listing your Home for Sale does not guarantee its' sell, nor are there guarantees that a Buyer will place an Offer, or that the Lender will accept the Buyer's Offer.

  13. Lenders are swamped with thousands of Short Sales and Foreclosures and, unfortunately, are understaffed to handle the caseload. Because of that and because of the required steps to process Short Sale requests, the Short Sale Offer and purchase process can be lengthy. Although some Short Sales close quickly once an Offer has been received (within 30-45 days), a minimum of 90 days is an average timeframe for the closing of a Short Sale.

  14. The listing of your Home will be competing with other Homes on the market including non-Short Sales that are competitively priced.

  15. If you have more than one Mortgage on your home and/or Mortgages with more than 1 Lender, the Short Sale process will typically take longer than if you have only one Mortgage.

  16. I am not an Attorney, nor an Accountant. I strongly advise you to consult your Financial and Legal Advisors regarding the ramifications of a Short Sale or Foreclosure.  

    Again, the information I provided here IS NOT comprehensive and does not substitute for the advice of Legal and Financial professionals, but is intended to provide you with basic, important details regarding the process. Contact me for additional details. If you are a Seller who wants to list a Short Sale in Fort Lauderdale or elsewhere, contact me for information about my Marketing Plan for your home.