Over the years we have represented both buyers and sellers in short-sale transactions. These are not ordinary transactions and your REALTOR’s experience in handling them may be the difference between a closed transaction or a failure to close.
A short sale can occur when the value of a home is less than what is owed to the bank. In other words, your home may be worth $400,000 yet your loan may be $450,000 as an example. Banks understand that this does happen occasionally and may be willing to accept a short sale in lieu of foreclosing on a property. Foreclosing on a property is costly and may take months or even years to finalize. So, the short sale may be an option the bank would consider.
The process is quite involved and often these transactions involve a seller’s hardship. There are many steps to the short sale so I will keep the process simple here. The seller must apply for a short sale and provide the bank with many documents including but not limited to financial statements, a hardship letter, tax returns, pay stubs and bank statements.
Why would a seller go through all this when they can just walk away? We’ve seen many properties where the sellers did just walk away. These homes then must go through the foreclosure process. A seller who opts for (and is approved for) a short sale can bypass the foreclosure which is a legal proceeding that will affect a property owner’s credit for years.
The short sale transaction is a complex process that can take months or even a year or more to complete. Throughout the short sale the bank may request several valuations of the property, for example, or request updated seller documents and this could slow or even change the process. On the other hand, if the listing agent has everything the bank has asked for and the asset manager is on the ball, the seller may receive an approval with the short sale from the bank in as short a time as a month or so. If the buyer is ready to close quickly, a short sale transaction could just take a matter of weeks. We know because we have experienced this.
Bottom line is as a buyer you must be prepared to sit back and wait it out. Approval for a short sale isn’t always guaranteed. The home should probably go on the market only if there is bank approval in hand, but unfortunately often this is not always the case.
As a seller, contact the bank regarding your short sale and see if this may even be an option for you. Reach out to a REALTOR with the SHORT SALE & FORECLOSURE Certification from the National Association of REALTORS and ask what experience they have in dealing with short sales. We’d be glad to offer you help in dealing with your short sale.
Brian Warner is a Navy veteran REALTOR who has volunteered his time in leadership roles over the years in Central Florida with several organizations. He works with his wife Linda who is an Accredited Buyer Representative (ABR) REALTOR, Senior Real Estate Professional (SRES), Military Relocation Professional (MRP), and are both Gold Key Certified (GKC). Together they have over 34 years of Real Estate experience and own Florida International Real Estate LLC
