What is a Short Sale?

A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.

Be aware that the seller need not be in default (to have stopped making mortgage payments) before a lender will consider a short sale. A lender may consider a short sale if the seller is current, but the value of the property has fallen, or the seller may be over-encumbered, and owes more than the home is worth, so a discounted price might bring the price in line with market value, not below it.

Offers on short sale properties are negotiated with the current owner. Once an offer is accepted by the owner, it is then forwarded to the homeowners mortgage holder (be aware there may be more than one mortgage holder). It must then be approved by the mortgage holder. There is not a solid deal then until the seller accepts the lender's terms and conditions. Any offer would be contingent upon lender approval.

Not all short sales take months to close; however, be prepared for possible delays.

Typical Short Sale Timeline

· Sellers Short Sale/Financial Application is submitted to mortgage holder(s).

· Seller accepts offer from buyer. Accepted offer is sent to mortgage holders Loss

Mitigation Department.

· Mortgage holder confirms receipt of Short Sale Package & Offer (10 to 30 days).

· Short Sale Processor ensures Short Sale Package is complete and up to date.

· File is assigned to Negotiator (30 to 60 days, up to 120 days if VA or FHA).

· Negotiator orders an appraisal (7 to 14 days).

· Short Sale Package & offer are deemed viable by Negotiator/Loss Mitigation

Department.

· File is then sent to 2nd Negotiator, if applicable (second mortgage holder, investor,

or loan servicer) for audit/review (14 to 30 days).

· Short Sale Terms and Conditions Letter received outlining any acceptance

requirements.

· Seller accepts/rejects mortgage holder(s) short sale terms and conditions.

If seller accepts ...

· Buyer agrees to changes to the purchase offer terms/conditions, if any

· Parties sign Arms Length Affidavit

· File proceeds to Under Contract status. Buyer proceeds with inspections, appraisal,

etc.


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