What is a Cooperative Short Sale and How Does it Work?

Services for Real Estate Pros with Lang Realty

A few months ago I closed my first Bank of America Cooperative Short Sale.  The process was easy, quick and appeared fair to all parties involved in the transaction.

In a nutshell, here's how the Bank of America Cooperative Short Sale Program works: 

  1. The Seller, who can be an owner occupant or an investor, decides to Short Sell their home.
  2. He/She provides Bank of America with typical documentation required in order for the bank to consider a short sale including, but not limited to, 1099s, W-2s, Tax Returns, a Hardship Letter, Bank Statements and a Financial Statement.
  3. The bank receives the documentation and orders an appraisal or a broker price opinion (BPO).
  4. The bank sets the list price for the home (as per the appraised/BPO value).
  5. A Realtor lists the property for sale at Bank of America's list price.
  6. The home goes under contract and said contract gets submitted to Bank of America.
  7. Bank of America renders a decision regarding the short sale approval within 10 days from the receipt of the sales contract.
  8. The transaction closes. 

While the process sounds easy and simple there are a few items (good and bad) you should be made aware of regarding this type of short sale:

  1. The Seller MAY qualify for a $2500 "moving/relocation" package at closing.  This is paid by the bank to the Seller at closing out of the proceeds from the sale.

  2. The bank sets the list price.  If the bank uses an unqualified appraiser or rely's on an inaccurate BPO, then the homeowner may suffer the consequences of losing the home (see below).

  3. The Realtor has 120 days to market the property.  If the property does not sell in 120 days, then the Seller may be required to turn the property over to Bank of America via a Deed in Lieu of Foreclosure.  This seems like a good deal for the bank, especially if they are setting the sale price, as they will not have to go through the long/expensive foreclosure process.

  4. As per "7" above, Bank of America can make a decision regarding the short sale in just 10 days.

  5. In contrast to the foregoing, a promisory note or a cash contribution MAY be required by the Seller at closing. 

  6. Bank of America MAY reserve the right to seek a deficiency judgment after the sale.  Accordingly, the Seller may wish to have an attorney review the Short Sale Approval Letter furnished by Bank of America to the Seller prior to agreeing to the terms of the short sale.

  7. Once there is a contract on the home, Bank of America MAY automatically "stay" the foreclosure (if applicable) until a decision is made regarding the short sale approval.

  8. The Bank of America Cooperative Short Sale Program can not usually be used when there is a second lien on the property.

On the surface the Bank of America Cooperative Short Sale Program seems appealing.  However, once you analyze it a little, there seems to be significan risks that the homeowner faces.  If Bank of America rely's on inaccurate valuation data regarding the value of the property, then the homeowner may be required to perfect a Deed In Lieu of Foreclosure.  If that were to occur, it may have been to the Homeowner's advantage to apply for a more "typical" short sale in hopes that an offer at or close to Fair Market Value (FMV) is obtained without the constraints of the bank setting the list price.

Overall my experience with the Bank of America Cooperative Short Sale was good.  I am now processing 2 additional Bank of America Cooperative Short Sales. The bank has priced one property accurately and the other at approximately 25% above FMV.  The properly priced one is under contract while the non-properly priced home has had 2 showings in 3 weeks.  I guess time will tell.

Posted by

Rick Schuster

Licensed Real Estate Broker - Jaycee Realty, Inc.
Licensed Title Insurance Agent - Home Guardian Title, Inc.
Licensed Mortgage Broker - Leading Edge Mortgage Corp

2101 NW Corporate Blvd, Ste 211
Boca Raton, FL 33431

561-206-2835 - via Google Voice
561-988-2546 -Fax

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Comments (6)

Morris Massre
Pembroke Pines, FL
Real Estate Instructor Broward County Florida

When you say cooperative are I'm assuming you're talking about co-op apts.?   It does, however, sound a bit risky too.

Sep 14, 2011 03:27 AM
Rick Schuster
Lang Realty - Boca Raton, FL
List with Rick, Sell it Quick!

Hi Morris:  Thanks for reading the post!  Actually, the cooperative short sale program is for Single Family Homes, Townhomes and Condos.  I am not sure whether co-ops are covered.  

Sep 14, 2011 03:53 AM
Bill Gustafson
Tallahassee, FL


Best explanation I've seen of the BoA cooperative program. I'm glad to hear that there is a sense of sanity being applied to at least some of the short-sales. Hopefully this approach will catch on and will be received positively. As you stated, it does all hinge upon a true, realistic value being applied to the property, as is the case in most sales. If the lender is involved enought from the beginning of the process and uses the services of local appraisers to help set the price, I cannot be anything but encouraged.


Great Post!!!

Sep 14, 2011 04:02 AM
Rick Schuster
Lang Realty - Boca Raton, FL
List with Rick, Sell it Quick!

Bill:  Thanks for the comment(s).  Your notation regarding lender involvement is truly an important element to the process.  

Sep 14, 2011 04:59 AM
Florida Tolbert Team Keller Williams Advantage
Keller Williams Advantage III Realty in Lake Nona - Orlando, FL
Keller Williams Land Luxury Division Specialist

I concur that BofA has shown remarkable strides in getting short sales done of late.

I just had one approved in 13 days and closed in 5 more.


Sep 17, 2011 04:25 PM
Rick Schuster
Lang Realty - Boca Raton, FL
List with Rick, Sell it Quick!

Kevin:  Glad to hear that you were able to get one completely closed in less than 3 weeks.  That's great work!

Sep 19, 2011 12:51 AM