The Short Sales process absolutely requires experience, knowledge and a great deal of patience. They start out much like a normal sale, the sale gets involved and tricky as everything starts moving along.
There are many facets and considerations along the way. The list below is a generic overview. If you have specific questions feel free to contact us.
Before you call some random Real Estate agent or self proclaimed short sale expert – Stop! Before you run down the road of doing a short sale you need more information than how to do a short sale. Before you end up at the end and your home is sold are you aware of the impact of this type of sale. Most homeowners tell me they would never file for bankruptcy while privately they believe it is an option for later if their bank wishes to try and collect the unpaid balance after a short sale (problem!).
Are you aware that for some homeowners after they complete their short sale they are not eligible to file for bankruptcy? For a very rare few it is actually better to allow the foreclosure versus completing a short sale, if there are heavy assets at risk (large saving accounts, etc.).
So your first step is to speak with as many professionals as you can prior to starting a short sale. More often than not the short sale is the best of the bad options out there but we suggest speaking with your CPA about potential tax implications, bankruptcy attorney about how that fits your situation, and an experienced Realtor/Negotiator as to what to expect along the way.
Prepare and price your home to sell based on SOLD home prices not the active prices. Proper pricing is key too low and the bank will say no.
Too high and you won’t get an offer. Consult with your Realtor and work together on pricing appropriately.
Select the strongest offer. Keep in mind the bank will need to approve the final offer Keep agreed seller concessions in line with your market averages. Too high and the bank will refuse to pay them.
If it is customary in your market for inspection cost to be negotiable try to have the buyer pay fees where they can. Again, the idea here is to keep the costs to the bank in line
Prepare and Submit the Short Sale Package Your package needs to be complete and accurate from the start This is the time to state your argument for the bank to accept your offer Follow up regularly and negotiate any sticking points with the bank. Prepare for the Sale / Closing The time it takes for approval can be anywhere from 4 weeks to 4+ months.
Be prepared for a quick closing once the bank approves the sales. Banks typically want the sale to complete within 30 days or less of the approval letter. Record and Archive your documents. Consider your tax obligations! Do not underestimate this! Many times there can be a substantial tax obligation after a short sale has occurred. Be sure to talk with an accountant or tax attorney to figure out how much money you may owe the IRS if you proceed with a short sale. Don’t forget to check out our page on IRS Form 982