How Do Realtors Handle Short Sales?

  1. Get a Property Valuation Analysis. …
  2. Get a Hardship Letter. …
  3. Contact the Lender for a Short Sale Application. …
  4. Prepare the Sales Contract. …
  5. Assemble the Short Sale Package Together. …
  6. The Loss Mitigator Reviews Your Short Sale Package.

Do Realtors get commission on short sales?

A short sale enables homeowners to stay in the home until the sale is completed. A foreclosure forces homeowners to vacate. While a seller typically pays all real estate agent commissions and other closing costs, in a short sale the seller pays nothing; the lender or bank foots the bill.

Who are the parties to a short sale purchase agreement?

A short sale is an agreement between a home seller and their lender in the beginning stages of foreclosure. It allows a home or property to be sold for less than the existing outstanding loan balance.

What is the buyer responsible for in a short sale?

A buyer must cover short sale repairs if the terms of the contract or short sale approval state that the seller and lender do not pay for repairs, other than those required by law, such as smoke detectors, carbon monoxide detectors and water heaters. A buyer or his lender determine if repairs must be made.

What are the risks of a short sale?

Potential additional fees

While the price of the home may be low, a foreclosure or short sale often comes with additional transaction costs. With a foreclosure, you may have to pay transfer taxes as well as any superior liens on the property. You may also have to pay an additional fee to the foreclosure company.

Does short sale mean cash only?

No cash-out

A short sale means they won’t earn any profit from the sale of the house – the bank or mortgage lender gets all the sales proceeds.

Will a bank accept a short sale offer?

The list price of a short sale home generally has little bearing on the actual price a bank may accept. … Just because the seller accepts the offer doesn’t mean the lender will, though.

What happens after a short sale is approved by the bank?

After accepting an offer, the homeowner or his realtor must forward the offer to the lender for review. If the lender approves the offer, the short sale moves forward. If the lender does not accept the offer, the buyer may counteroffer or end the process.

How long do short sales take?

Once an offer is received and signed, I send it to the bank, along with the seller’s short sale package and a prepared HUD. From that point to the time of short sale approval, the average timeline is about 60 to 90 days. It means 30 days to sell + 60 days for approval + 30 days to close escrow = 4 months, on average.

Who pays closing costs on a short sale?

These seller closing costs include things like property transfer fees, realtor commissions and attorney or title company fees. In a short sale transaction on the other hand, the seller’s closing costs are usually paid out of the money the buyer brings to the closing.

Can a seller back out of a short sale?

A lender approval clause is added to the contract with an addendum and the buyer must agree to it in order to have a chance of getting the home. The clause allows a seller to back out of the transaction if his lender does not approve the sale.

Who pays the agent in a short sale?

In rare markets, a buyer may also pay agent commissions. In a short sale, the commission technically remains the responsibility of the seller, but the lender covers it with part of the sale proceeds.

Does a short sale need to be disclosed?

Short sales need to be disclosed.

Potential buyers should be aware that the sale price on the home is less than the mortgage balance, so they’ll be responsible for negotiating with a lender, as well as dealing with the seller.

What are the steps in a short sale?

The Short Sale Process For Buyers: 6 Steps

  1. Step 1: Get Approved For Financing. As with any home purchase, the first step is getting approved. …
  2. Step 2: Get A Real Estate Agent And Find A Home. …
  3. Step 3: Do Your Research. …
  4. Step 4: Make An Offer. …
  5. Step 5: Have The Home Inspected. …
  6. Step 6: Close On The Property.

Why do banks take so long to approve a short sale?

When an owner applies for a short sale, the lender will ask for a ton of paperwork. Sometimes it seems that the lender asks for more paperwork in a short sale than when the borrower took out the loan. … And the more money the lender will lose, the more time it may take to process and approve the short sale.

Do you still owe money after a short sale?

After the short sale is completed, your lender might call you or send letters stating that you still owe money. These letters could come from an attorney’s office or a collection agency, and will demand that you pay off the deficiency.

What are the pros and cons of a short sale?

The Pros and Cons of Buying a Short Sale

  • Short sales can take a long time. …
  • They are sold as-is. …
  • Make sure the lower price is really worth it. …
  • The good deal factor can be influenced by the market conditions. …
  • Less competition. …
  • Don’t overlook needed repairs. …
  • Home inspections are a must.

Why do short sales get denied?

A short sale is sometimes denied due to something as simple as the seller being current on paying their mortgage. The bank’s guidelines might state the bank isn’t allowed to approve a short sale if the mortgage payments aren’t in arrears.

How low will a bank go on a short sale?

As an investor, it’s important to compare similar properties in the area and get comparable prices. In some cases, banks have been known to approve short sales priced between five and 10 percent under market, but that depends on the property and area. Another aspect of due diligence is calling the listing agent.

What happens if a short sale is denied?

An incomplete file typically means the documentation that the bank is requesting from the seller has not been obtained in a timely manner or is incomplete. … If this documentation is not met, a short sale lender will deny a file and make the listing agent, title attorney and seller start all over again.

How can I speed up a short sale?

Speed up your short sale closing date by making your offer as free of contingencies as possible. Submit your mortgage approval with the offer. Contribute a substantial deposit to show your good intentions.

Does a short sale affect credit?

The term “short sale” does not appear in a credit report. When you negotiate a short sale, the lender is agreeing to accept less than the full amount owed on the mortgage, and will likely report the account as settled for less than the full balance. … With time, the negative impact on your credit scores will decrease.

Is it better to do a short sale or foreclosure?

Timing also differs: Short sales can take up to one year to close, while foreclosures generally move along much faster because lenders are intent on recovering the money they’re owed. Furthermore, a short sale is far less damaging to your credit score than foreclosure.