The Short Sale Process

by admin on March 22, 2013

John Latham has been in the foreclosure industry for more than 20 years with his family’s foreclosure trustee business. He is also a Certified Short Sale Negotiator (CSSN) and a REALTOR® with Spinnaker Realty.

 

Brett: Hi I am Brett Adams, Broker of Spinnaker Realty.  We have with us this morning John Latham, and we’ve been talking about Short Sales.  We’ve already talked about what a Short Sale is, and we’ve talked about what the banks are looking for to see if someone qualifies for a Short Sale.  John, if someone has watched this video and they determine that they do qualify for a Short Sale or they probably will, what is the first step they should take?

John: Well, the first part of our process is the fun par – filling out the paper reqwuired work in the short sale packet. This includes a hardship letter, an authorization to release information, a hold harmless agreement, and a financial statement.

Brett: That seems like a lot of work. Is all that really requried?

John: Three of the documents are for the bank. They need the hardship letter and financial statement to justify the short sale.

They need the authorization to release information so that I can discuss your situation with them and begin negotiating the short sale agreement. Without it, they won’t speak to me at all.

Filling out the paper work takes some time, but it will be worth it if you can avoid foreclosure.

Brett: After the paper work is filled out, what’s next?

John: The next part of the process is similar to the typical residential listing. We both sign an exclusive right to sell contract that gives me the ability to market your house.

I put a sign in the yard and list your house on the multiple listing service or MLS, while you get your house clean and ready for buyers.

The main difference in short sale advertising is that your listing on the MLS will let other REALTOR®s know that this is a potential short sale.

Another difference between a short sale and a typical residential sale is the pricing of the house. In order to forestall a foreclosure, we must get an offer. To do this we are aggressive in the pricing.

While we begin at market value, we must drop the price early and often until we get an offer.

Brett: Does the seller have to take whatever offer they can get?

John: Absolutely not. The seller is in control. The bank cannot force you to sell your house. They do have the right to pursue a foreclosure if your agreement with them has been violated, but they do not have the right to make you enter into a contract to sell your house.

The residential contract is an agreement between the buyer and the seller. However, if the sale of the house will not satisfy the debt owed to the bank, you must get their approval to conclude the sale. This is done by adding a Short Sale Addendum to the contract.

Brett: Once the contract has been approved by the bank, what’s next?
John: Hopefully closing is next. Like a typical residential sale, there will be potential hurdles to overcome in order to close the deal. There will probably be inspections. The buyer may need to secure financing.

Unlike the typical sale, during a short sale the bank can continue to consider offers and a better offer may keep the deal from closing.

Brett: So, if the process doesn’t make it to closing, what happens then?

John: The house would go back on the market and we would continue to be aggressive in getting an offer. However, we could now advertize to the other realtors that the bank had approved a short sale at the list price.
As you can see, the short sale process isn’t that complicated and not too different from a typical residential sale.

If you’d like more information about the process or if you are ready to work with me on selling your house, give me a call at the number on the screen.

And remember, you are not alone. There is hope and there is help!

 

View the next video in this series: Short Sales vs. Foreclosures

View the previous video in this series: Who is a Candidate for a Short Sale?

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