A simple description of a short sale is a home that is on the market for less than the debt owed to the lender. The seller is hoping that the bank(s) will accept less than the note(s) and allow the seller to be forgiven the difference between the note and the sales price.
When the seller accepts a short sale offer, the sale is contingent on the approval of the bank that holds the note. At this point the home should show a pending status in the MLS since it has an accepted offer. The bank doesn't own the home, they approve the sale and accept the loss on the note or they don't approve and the seller can cancel the escrow because of the short sale contingency. Often a response from the bank can take 40 - 60 days. This can be very frustrating for a buyer and their agent.
Buyer's should be cautioned not to make multiple short sale offers once they have an accepted offer. If a seller approves the offer, technically you have opened an escrow in California and have a binding contract. That is why the contract reads California Residential Purchase Agreement and Joint Escrow Instructions. Placing additional offers on other properties while waiting for the bank approval is not recommended.
Sellers that want to sell a home in a short sale situation should start negotiations with the bank holding the note(s) prior to getting an offer / as early as possible. Good comunication with the lender will be crucial to a successful short sale.
Below is a set of paperwork that I give to my sellers that might need a short sale:
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Preparation and communication are critical to the success of your short sale transaction.
Regards,
Steve Hirschler
Associate, The Tim Wood Group
Coldwell Banker Mountain Gallery
42153 Big Bear Blvd.
P.O. BOX 6820
Big Bear Lake, CA 92315
steve@bigbeargallery.com
909 866-3481 EXT. 217 CELL 909 725-5889
Fax 909 866-3531
http://www.stevesellsbigbear.com
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I think this is a great service you are providing people, I don't think most people realize how much information they need to give a lender when it comes to doing a short sale. Sometimes you have to open up and shed a tear if it was a death or a medical problem that caused your situation. Most people are embarrassed by their situation and that is why they don't make calls in the first place. But, I tell people it is better to face your problems earlier than later, because there are a lot more option is you address it early, maybe even options that can let you keep your home.