The steps to doing a short sale on a home
The steps to doing a short sale on a home
I would like to tell you that doing a short sale is an easy and smooth process, but the reality is that there are several hoops to jump through and it takes a good deal of patience on the part of everyone involved. To get you started, lets walk through the major steps in doing a short sale.
To short sale your home you will have to list it for sale! This seems like an obvious step, but sometimes people have investors or friends that are willing to step in and buy their homes from them. The banks have gotten suspicious of this and now almost always require that the home be on the market before they will even look at an offer.
Select and experienced short sale real estate agent. Don't believe their hype, and ask them about their successes and failures. Find out how many they have done and how they can help you sell your home. Don't fall for any flash or smoke and mirrors. Selling a home short is a lot of work and you need a solid, full time agent leading the way!
Do regular price drops until you get an offer. This is not a time to get emotional about the price that your home sells for. You are not going to make money in this case. The worst thing you can do is sit on your home with a price that is too high and not get offers. You can't sell too low because even if you accept an offer, the companies that have loans out against your home have the final say in its selling price.
Remember, it is you and your buyer against the bank! You want to sell and the buyers want to buy, your common foe is the bank. Don't squabble over small amounts of money, get the buyers locked into an offer. Again, the bank will have the final say on the selling price.
Once you have accepted an offer the bank will do a BPO. The BPO is their way of determining the value of your home, and is part of their decision on what to accept as a final sales price. There is very little you can do about this, or what the BPO agent decides to value your home at. If they do come in way too high, you need to have your agent fight to get it lowered though. It doesn't always work, but sometimes helps.
With the offers in and the BPO done, the banks will decide what they will accept as a loss and let you know the final price they will take on your home. There is some room for negotiation on this, so make sure your agent is on top of keeping the buyers in the game and that the bank is being as reasonable as possible. Waiting for the bank to do this analysis is one of the slower parts of a short sale. It could be weeks or even months before you get a final answer!
If you have a second mortgage, that will also have to be negotiated. This is sometimes done in conjunction with the first mortgage, but not always. I told you, this is not a fast process!
Once you have an offer accepted all around by you, the buyers and the bank, the sale will close more or less as a regular transaction. In whole, a short sale is very similar to a regular real estate transaction, just with an added party in the middle.
A final note is that you should always work to avoid the bank being able to have recourse to recapture their losses from you in the future. Rules for this vary from state to state and some banks are more willing than others to release you from the loss, but it is something you should talk with your real estate agent about at the beginning of this process.
There are the rough steps to selling a home short. I hope it answered at least a few of your questions, and of course you should always consult a local real estate agent or real estate attorney for the exact details for your location.
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