How To Carry Out Short Sale Properly?

It is important to know what a short sale is all about before understanding how not to short sale.

Initially, a short sale is not a case where a property goes into foreclosure. In this case no sale is made whatsoever, rather the lender is simply taking back the investment to cover or restrict its losses. Additionally, a short sale is not a case where the seller agrees to reduce the asking price of a home, consequently creating less profit, to encourage a quicker sale.

What a short sale is, is when the house owner can no longer come up with the money for the property and hence wishes to sell. They might, however, find that the property is valued at less than the outstanding amount of the loan which means that if they did make a sale, they still have a deficit to make up. In this case, the lender might agree to waive the outstanding balance on the loan so as to restrict their losses and prevent a foreclosure.

What the agent, in this case, should bear in mind is that in a short sale all decisions lay with the lender and the house owner is left without a say on the price. Although it is true to say that the lender would, obviously, be pleased with a better sale value the agent shouldnt get greedy and hold out for a higher value. This is because a fast sale is essential and a lot of delays might lead to the lender cancelling all negotiations and proceeding with foreclosure.

On the other hand, the agent shouldnt try to rush the sale by selling at a very low price. Again, the lender is the decision maker and if the value is very less then they will not accept and go ahead with foreclosure. Whatever be the reason for it, if the bank wishes to foreclose then the seller loses their home and credit rating, whilst the agent loses any potential commissions.

One more thing that an agent shouldnt do when it comes to short sales is leaving anything open for negotiation at the back end. Once the proposal has been submitted to the lender the terms of that proposal, if accepted, should be adhered to exactly. If at any point after the proposal has been submitted and accepted, either party desires to alter anything, then the lender is likely to totally pull out of the deal and go ahead with foreclosure.

Due to this it is vital to have everything finalized before submitting any proposal to the lender. This includes all negotiations on price in accordance with results from a home inspection, to the commission received by the agent.

The chief factor in accomplishing a successful short sale is not to forget that the lender is the ultimate decision maker and should be appeased at all times. When it involves commissions, price and timing, the seller has no say in the matter as the house is effectively no longer theirs.

Keeping this is mind will assist you to concentrate on the priorities of the deal and help to ensure a quick resolution that is best for all parties concerned.

by: Cory Boatright

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