Short Sale Basics

A short sale is when a seller owes more than a home is worth and the bank(s) holding the mortgage(s) are being asked to accept less than they are owed in order for the seller to sell the home.  This is called being upside down in your home.

Banks will accept a short sale if the seller has a valid hardship and if they do not accept a short sale they may well get the home back as a foreclosure (REO).  It is almost always better for the bank to accept a short sale than a foreclosure.

Valid Hardships Include but are not limited to:

• Death
• Bankruptcy
• Job transfer out of area
• Medical Problems
• Job Loss
• Reduced Income

The basic requirements of most banks to process a short sale are:

• Letter of authorization allowing a third party to speak to your bank on your behalf
• Completed Financial Statement
• Last 2 years tax returns*
• Last 2 months of bank statements*
• Last 2 paystubs*
• Seller hardship letter ( see above)
• Preliminary HUD 1 (provided by title agent)
• In addition my office requires Homeowners Association Contact Information.

From the Listing REALTOR I require:

• Three sold comparables, within 2 miles of the subject property, in the same subdivision if possible, sold within 6 months, within 15% square feet of the subject property and with 1 bedrooms and .5 baths.  Preferably with same waterfront, pool, and or conservation options.  This information together with our state of the art software will enable me to fight the BPO if it comes in high.

The short sale lender requires from the listing REALTOR:

• A copy of the listing agreement.
• A copy of the signed HUD
• A copy of the preapproval letter.

Once all of the required documentation is submitted to the proper party at the short sale lender(s), (we will place the borrower name and loan number on every page – very important when you negotiator at the bank is receiving thousands of pages of documents a day) the follow up begins.   At this stage followup is crucial to the success of the transaction.  My Short Sale Rescue will follow up weekly and will update the file accordingly (remember we provide 24/7 online access to your file(s).

Stages of a short sale.

1. List property for sale short sale
2. Provide short sale package to seller to begin compiling documents
3. Obtain short sale offer
4. Send completed short sale package and offer to My Short Sale Rescue.com
5. MSSR.com will send the completed package offer and preliminary HUD to the short sale lender.
6. Realtor will be notified of MSSR.com file # and password access to file.
7. MSSR.com will verify receipt of package/authorization letter by short sale lender
8. A negotiator will be assigned to the file
9. A BPO (broker price opinion) will be ordered by the SS lender
10. Negotiator will get back to us with any requirements
11. The bank issues a short sale approval letter.  We will negotiate terms as necessary.
12. Once an acceptable approval letter is received we schedule the closing!

This is a very simplified version of the actual reality but is the basic outline of the process.