subject: Know How Real Estate Short Sale Works [print this page] Perhaps some of you are thinking what short sale is all about and how it works. This article would tell you more about the short sale process. This offers an in-depth explanation on procedures in a short sale business from the short sale request of the seller to the bank for its approval to the short sale request.
What is meant by a short sale? Short sale is a sale of real estate in which the sale profits fall short of the balance payable on the property's loan. This occurs when the borrower either has a hardship or the borrower owes more on the mortgage than the home is worth. In this instance, the bank would decide to sell the property and it would need both the partys consent for the short sale to avoid foreclosure.
During a short sale process, the borrower or the seller of the property would first need to put a financial package in order to be submitted to the short sale bank. The package consists of the letter of authorization, which lets your agent speak with the bank, HUD-1 or preliminary net sheet, a completed financial statement, the hardship letter of the borrower, 2 years of tax returns, two years of W-2s, recent payroll stubs, last two months of bank statements, and the comparative market analysis or list of recent comparable sales. Once the package has been submitted to the bank, the bank will then find prospective buyers of the property.
If a buyer is keen on buying the property, he will then be required to send a short sale offer letter to the bank. After this, the bank would negotiate with the seller. If the seller accepts the offer, the listing agent would send the listing agreement, executed purchase offer, the buyers pre-approval letter and copy of earnest money check and the short sale package of the seller to the bank. The short sale is then processed by the bank.
The bank first acknowledges the receipt of the file. This might take ten days to 1 month. Next, a negotiator is assigned to take charge of the negotiation. A broken price opinion is ordered subsequently. The bank would probably refuse to share the results of the BPO. Then, the file is sent for review or to the pooling service agreement. This may take another two weeks to thirty days. Once the file has been reviewed, the bank may then request that all parties sign an arms-length affidavit. Finally, the bank issues a short sale approval letter.
It requires a lot of time for a short sale to be approved. This is the main reason why most of the buyers cancel their short sale transactions. Buyers may get tired of waiting a very long time to get a response from the bank. Thus short sale is not for you if youre a kind of buyer with a little patience.
Short sale is a business that needs to be researched properly first before you engage on it. You should have a good agent who fully comprehends this process. Adam Alcaraz, of Orange County real estate would want to help you on your short sale troubles. Adam has been an Orange County short sale agent for fifteen years and has been successfully handling short sales in all the cities of the Orange County.
