What is a short sale


What does it mean to short sell (short sale)?

In brief, a short sale occurs when a seller must sell their home for less than what is owed on the mortgages, (i.e.) you owe more to the bank than what your house is worth today. Both the bank and the seller must agree to short sale terms, which, when agreed allow the current owner to avoid a foreclosure. A short sale does not necessarily release the owner from his obligation for the difference between what the property sells for and the loan balance, also known as the deficiency, however going into foreclosure has far more serious ramifications for the buyer in the long term.   An experienced agent should be able to negotiate debt forgiveness on a short sale while working within the sales negotiation process, thereby alleviating the sellers responsibility regarding any deficiency.

What are the steps;

All things considered, a short sale can be a reasonable solution to a big problem.  In the short sale process, the seller authorizes the agent to contact the bank to inquire about proceeding with a short sale; then the seller must compile all of their loan docs for the agent. At that point, the bank will decide weather they will allow a short sale or not, and if they allow it the bank will order what is called a BPO or “Brokers Price Opinion” of value that the bank then uses to price the home. This will also give the home owner an idea of where they might stand with regard to any potential deficiency. Once the lender has agreed to allow a short sale, the agent will list the property for sale. When a buyer is found, escrow will be opened and an appraisal will be ordered on the home by the buyer/s’ lender. The note holder will do a final valuation of the home to decide if they feel that the contract price is acceptable. Once the price is agreed on, the inspections will proceed on the home and it will move toward a final closing. All of the proceeds will go to the bank holding the 1st note and if there is a 2nd note, that payoff will be negotiated during the escrow process as well. In a short sale, the seller cannot receive any proceeds.  The banks have realized and are now much more willing to accept a short sale than they were in the early days of the financial crisis. And moving forward with a short sale is the quickest way for both parties to solve the problem.  Navigating all the intricacies of a short sale is something you want to put in the hands of a very experienced short sale agent, as they can help navigate all the possible pit falls, including avoiding a deficiency. So if you think you might be upside down in your home, please call us and we will be happy to let you know, through careful analysis, what your property is worth. At Myer Realty,  we can give you expert counsel to help you decide if a short sale is the right move.