We've seen the phrase "Short Sale" increasingly in real estate ads over the past year. I've found, however, that many Sellers, Buyers, and yes - even sometimes the Realtors who are writing the ads - do not actually know what the phrase means.
Seems easy enough to figure out, right? Two small words learned in grade school. Most buyers have determined by now that the phrase indicates the Sellers are more than willing to sell their house at a great price. But these two little words mean much more than that . . . they represent an organized process requiring work and cooperation from the Seller, the Seller's Agent, the Buyer, the Buyer's Agent, and a bevy of people working for the Seller's Mortgage Holder.
A Short Sale is basically convincing the bank holding the current mortgage to take less than a full pay-off of the mortgage balance owed on a home, and then write off the rest. A well executed short sale is a positive experience for everyone involved: Banks avoid a foreclosure, Realtors can sell a house that otherwise would not sale, Buyers can get an excellent purchase price, and Sellers can sell a house they are "upside-down" on without ruining their credit. But don't step into the process lightly or expecting a quick turn-around because not every listing agent understands what is required of them prior to advertising a short sale opportunity. Poorly executed short sales can be extremely frustrating to sellers, buyers, and the realtors who work as buyer's agents.
In today's market, banks understand a property's fair market value may have been reduced by no fault of the owner. They also have their hands full with foreclosure properties waiting to sell, so they are frequently willing to allow a short sale when they have an able buyer and distressed seller rather than taking on another foreclosure. But, that doesn't mean they will entirely neglect to analyze the situation and simply jump to accept whatever the buyer is offering.
Unless the listing agent has performed their job prior to advertising with those two little words (which, is unfortunately not always the case), a "Short Sale" offer typically takes four to six months to close - if it closes at all. On the other hand, if the listing agent has done their job, a short sale offer can be accepted and closed in just two weeks!
So, what is the listing realtor's job when representing a seller with a short sale? Well, first - they must obtain approval by the bank to offer the property as a short sale opportunity!
Before approving a property for a short sale, the mortgage holder will analyze the current fair market value of the property as well as the Seller's financial situation to assure they can no longer afford the house. They are rarely going to accept less than is owed on a mortgage simply because the owner is impatient to sell the property. Thus, not every property nor every seller will easily qualify for a short sale. To prevent frustrating the buyer and avoid misleading advertising, the listing agent should work to provide all necessary information to the mortgage holder proving the property is acceptable for a short sale - prior to advertising it as one.
An experienced and successful short sale listing agent is critical to the process proceeding smoothly. Once the bank has reviewed the documentation proving that the fair market value has fallen below the loan balance, and reviewed the seller's financial situation proving they are unable to continue paying for the property by the original, agreed upon terms, they will be able to make the determination to allow a short sale. At this point, and not until this point, the listing realtor should begin advertising a property as a short sale opportunity.
If your listing agent has recommended advertising your property as a short sale yet they have not mentioned working to obtain approval from your bank, they likely do not understand the full process and simply believe the phrase is an easy way to motivate buyers to make offers on the property. If you wish to persue a short sale, consult an agent with the experience to successfully guide you through the process.
Call or email Property Source Pros to discuss listing your property as a short sale, or to discuss purchasing a property currently being advertised as a short sale. I can walk you through the entire process, give you an honest opinion on where it stands, and help you navigate a smooth short sale! Julie@PropertySourcePros.com; 706-376-PROS (7767).
