SHORT SALE
Short Sale in real estate is when the bank (lender or the one who holds the loan) sells the property for less than the amount owed on the property by the borrower. When the borrower default's on the payment the bank decides whether it is better to take this pre-foreclosure option rather than constanly pressing on the borrower and repossessing the home.
This optional consideration is what makes the short sale process not always a pleasant transaction, especially when the homeowner does this on their own. Here are all the key players that are advised when considering a short sale. (Make sure they are knowledgeable in real estate and are the ones actually working on your situation rather than just passing it off to someone else to do)
A CPA/accountant that is knowledgeable of the short sale tax ramifications
A real estate lawyer that is competent that will look over your paperwork
A realtor that is experienced in short sales process
A short sale processor that works only on your file from start to finish
All of these professionals should be considered when doing a short sale, however there a many unscrupulous business out there. The simple fact that when a sales agent (or whatever title they are given) sells you pre-foreclosure options but will never actually work on your file should be a huge red flag. (Your fees are paying for the sales person's commission or a professional that outsources your short sale and just collects their fees - these practices are exposed in another posting)
If you are a homeowner that can no longer afford to keep your mortgage payments current, then consider a "short sale" as a pre-foreclosure option. Depending on your situation your bank may consider a short sale that may greatly benefit you and your family for a better future. Moreover, not all properties qualify for short selling their payoff amount so that is where experience is a key factor. Also know that your credit score varies from short selling your home, however the recovery time is dramatically different than that of a "foreclosure."
In a nut shell here is the basics of what you will go thru during a real estate "short sale". Just keep in mind that the banks (lender) have varying requirements and conditions and if you don't cross the "t" or dot the "i" right, then at best you signed something that will benefit the banks or at worst you will be denied a "short sale" which may lead to the path of a foreclosure down the road.
Submit a Letter of Authorization
Calling the Bank for an Assessment
List your Property
Create a Short Sale Package
Process the file with the Bank
Maintain the Process with all Parties
Close Short Sale processing and finalize the Paperwork
At this point you should know where you as a homeowner stand with your taxes and someone in the legal profession to look over your paperwork. With all of the ducks placed in a row and everything processed correctly you shall have an approved "Short Sale."
John Kim
Short Sale Specalist
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