First, here's the link to the Wikipedia definition.
The type of short sale I'm talking about is when a home owner needs to sell the house, but they owe more than it will sell for. They may have more than one mortgage, and there may also be late HOA payments or other liens such as unpaid water bills, plus taxes need to be paid up until the day of the sale. If they fall behind on the mortgage, the bank(s) may have started foreclosure proceedings, or second mortgages may have been sent to collections.
If you are a Colorado home owner in this position, you should call the Foreclosure Hotline (1-877-601-HOPE), and/or speak with a tax accountant or financial advisor before making your final decision. But a short sale may be the right option for you. If so, here's the process -
Find a real estate agent experienced with short sales, who has a good record of actually getting them closed, and get your house on the market.
Contact your bank, notify them that your real estate agent needs to be able to speak with them about your account.
You need to take the short sale of your house as seriously as you would a 'regular' sale. In other words, prepare your house for showings, make it as easy as possible for people to see it in its best light. I know it's very hard to do this when your heart isn't really isn't in it, but believe me - if your house shows well it will stand out among the other short sales.
And you should hire a real estate agent who will take this sale seriously, not one who gives their short sale listings 'second class' status, with few or even no photos, and no real attempt at marketing. A home being offered as a short sale will attract more serious buyers if it's presented in its best light.
At this point your agent should contact the bank(s) and find out what documentation they will need to make a decision once an offer is received. This will be things such as paycheck stubs, bank account records, etc. Most banks will not do anything towards moving the process along until an offer is received.
Once an offer is received, the real process begins. The bank(s) will order an appraisal or BPO (broker price opinion), then they will look at the bottom line and determine whether they will agree to accept the offer (which would mean releasing their lien on the house), or counter the offer (which would mean saying they want more money), or deny the offer and continue with foreclosure process. What you as a seller want to be sure of, is that the bank(s) will agree to pay off all liens and all costs of the sale including title insurance, agent commissions, closing costs, etc., and release you from the remaining amount owed.
That all sounds pretty simple, and seems like it should be taken care of in a day or two, right? Well, in reality it takes most banks several weeks or months to do their part after the offer and all required paperwork is received. This is the time that a lot of buyers actually find another house or simply get tired of waiting and withdraw their offer. Keeping the buyer hanging in there during this ridiculously long process is another reason to have your house looking as good as possible during the showings. Most buyers will continue to look at other houses while they wait, you want their memory of your house to be as appealing as possible.
This is also why short sales sell so far below 'market value'. The banks make the process far longer than most buyers can wait, so they have to be enticed by getting a great price.
In the best-case scenario, the bank(s) accept the offer or come back with an acceptable counter offer. And they usually include a stipulation that the deal close within 30 days or less. Usually, the buyer waits until written acceptance is received before they will do inspections, order appraisals, etc. So suddenly, after waiting so long, it's all a big rush.
And then hopefully you will be at the closing table, saying farewell to one chapter of your life, but free to move on and create the rest of your future.
Read more about short sales in Arvada Colorado here.
I write posts on real estate issues and local events in the Denver metro area, especially those *communities between Denver and Boulder, as a public service. My hope is to give people an idea of the 'flavor' of our community, in case they're new or moving to the Denver area.
I am a residential real estate agent, happily helping folks buy a house or sell a house in the beautiful and friendly *suburbs northwest of Denver.
*Arvada, Broomfield, Lafayette, Louisville, Superior, Westminster; also Thornton, Golden, Wheat Ridge, Northglen, Lakewood
Read more about Arvada Colorado, a historic small between Denver and Boulder.
Find Homes for Sale, no Matter Who Listed Them, on my website.
Copyright © 2011 Joetta Fort
Comments(0)