A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower.
NOTE: As a Buyer you may get so tired of waiting for short sale approval that you threaten to cancel if you don’t get an answer within a specified time period. That type of attitude is self-defeating and will not speed up the short sale process. If you have little patience, perhaps a short sale is not for you.
The Basics of a Short Sale
Banks grant short sales for 2 reasons: the seller has a hardship, and the seller owes more on the mortgage than the home is worth.
A few examples of a hardship are:
Unemployment / reduced income
Divorce
Medical emergency
Job transfer out of town
Bankruptcy
Death
Writing the Short Sale Offer and Submitting to the Bank
Before a buyer writes a short sale offer, a buyer should ask his or her agent for a list of comparable sales. Banks are not in the business of giving away a home at rock-bottom pricing. The bank will want to receive somewhat close to market value. The short sale price may have little bearing on market value and may, in fact, be priced below the comparable sales to encourage multiple offers.
After the seller accepts the offer, the listing agent will send the following items to the bank:
Listing agreement
Executed purchase offer
Buyer’s preapproval letter and copy of earnest money check
Seller’s short sale package
If the package is incomplete, the short sale process will be delayed. In this event, the bank might even shred the package.
The Short Sale Process at the Bank
Buyers may wait a very long time to get a response from the bank. It is imperative for the listing agent to regularly call the bank and keep careful notes of the short sale process. Following is a typical short sale process at the bank:
1. Bank acknowledges receipt of the file. This can take 10 days to a month.
2. A negotiator is assigned. This can take 30 to 60 days.
3. A Brokers Professional Opionion(BPO) is ordered. The bank probably will refuse to share the results of the BPO.
4. A second negotiator may be assigned. This can take another 30 days.
5. The file is sent for review. This can take 2 weeks to 30 days.
6. The Bank may demand that all parties sign an Arm’s-Length Affidavit.
7. The bank issues a short sale approval letter.
Nashville TN Real Estate and Surrounding Area Specialists
When you are ready to Buy or Sell Property in Tennessee then you are ready for the Tennessee Real Estate Professionals Diane O and Friends. For more information about Diane O and Friends and our real estate services please fill out the online contact form or give us all call.
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Office: 615-371-1544
Diane Cell Phone: 615-406-2184
Mandy Cell Phone: 615-477-6959
Fax: 615-472-7931
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