The short sale process can be confusing and lengthy, especially since not all buyer’s agents know what a short sale is or how to do one. Short sales are not for everyone, but for the right person and situation, they can be the answer and the end to torturous debt that comes along with not being able to pay your mortgage on time.
If you are a heroic member of our society, such as a firefighter, teacher, police officer, medical professional, or member of the military, and you have fallen on hard times and need assistance with a short sale process, Homes for Heroes can help you.
Struggling from time to time is part of life. Here at Homes for Heroes, we want to alleviate some of the stress by serving you wherever you may need us, even if it’s a short sale process. We can match you with a specialist local to you who has knowledge and understanding of the system. Sign up to speak with an affiliated specialist today.
While you’re waiting for the phone call, read this article to get a better explanation of the short sale process to help you decide what’s right for you and your family.
What is a Short Sale?
Short sales are granted for two reasons:
1. The seller is going through a hard time and can’t pay their mortgage.
2. The home does not have enough equity to pay off the loan after selling it.
Who grants the short sale? Banks decide if a short sale is the best option for the circumstances of the situation. Sometimes, a bank will consider a short sale for cases of unemployment or reduced income, medical emergency, divorce, death, bankruptcy, or having to relocate because of work.
As the seller of the home, you will have to gather a few things to submit to the bank, along with your request for a short sale. Even though every bank has different guidelines, the process is usually the same for all of them. The seller needs to put together a financial short sale package that includes various items such as:
- 30 days of pay stubs
- Comparative market analysis or a list of comparable sales (as known as ‘comp sales’)
- Tax returns for two years
- RMA or completed financial statement
- Two years of W-2’s
- Letter of authorization (this gives your agent permission to speak with the bank)
- Preliminary closing statement
- Seller’s hardship letter
- Bank statements from the past two months
- Short Sale Offer and Bank Submission
The buyer of the home must submit a short sale offer. Before doing so, they should request a list of comparable sales. Making an offer closest to market value gives the best chance of approval. To promote several proposals, sellers might price the home lower than market value.
Most of the time, the bank begins a short sale procedure after the purchase offer is accepted. Occasionally, the bank will start the process beforehand, but it’s not common. Once the seller’s proposal is submitted, some items are sent to the bank by the agent.
- Sellers short sale package
- Executed purchase offer
- Listing agreement
- Buyer’s preapproval letter
A delay will occur if the short sale package is incomplete. Take caution: if there is an error, the bank may destroy the entire package. So, have extra copies just in case.
At the Bank
The short sale process takes it’s time once it arrives at the bank. A response may not come for weeks or months once it’s submitted. The listing agent must call the bank regularly and keep precise notes of the process.
Due to the amount of time it could take to receive an answer from the bank, buyers are frequently tempted to cancel and withdraw their offers. Patience is an essential attribute to possess if you are considering a short sale. Negative thoughts and attitudes won’t make the process go any quicker, and canceling after it has begun can cause a lot of unnecessary stress for the buyer.
Once the offer arrives at the bank, the process goes something like this:
1. The bank recognizes the receipt of the file. That could take ten days to a month.
2. Assignment of a negotiator can take up to 30 days.
3. The bank orders a BPO, or broker price opinion. Keep in mind that the bank won’t share the results.
4. In some cases, the bank will assign a second negotiator who could take another 30 days.
5. The bank sends the file for review. Keep being patient because this can take two weeks to a month.
6. All parties may need to sign an Arm’s Length affidavit per request of the bank.
7. The bank approves the short sale and issues a letter.
The short sale process can be lengthy but don’t get discouraged and cancel because an answer will come soon enough. It can take anywhere from 2 weeks to 120 days. Contradictory to what you might think, the length of the process usually depends on the investor, not the lender.
Getting the Assistance You Need
An agent can assist in speeding up the process by keeping track of the file and contacting the bank once or twice a week. The agent must also hold the bank responsible and recognize inept negotiators and request for different ones when needed. With any luck, the negotiators and the buyer will have the same interest in completing the process quickly.
The short sale process can be tricky to understand and lengthy to complete. Having the right agent in your corner can help make the process easier.
Homes for Heroes would like to pair you with a specialist who knows and understands the short sale process. This kind of real estate sale can be a headache, so we want to work alongside you to facilitate and speed up the process.
Sign up to speak with a short sale agent today about your needs to get started. With patience, determination, and an agent willing to stay on top of things, your short sale process can be more straightforward than you think.