San Diego Short Sale Specialists
A short sale is a transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on the loan. This page offers information about the basics of short sales for both Sellers and Buyers. Please contact one of our agents to discuss your situation when ready.
Initiation of a Short Sale for Homeowner
There are a few reasons banks may approve short sales. One of the reasons is if the seller has a hardship, and the other is if the seller owes more on the mortgage than the home is worth.
A few examples of a hardship are:
- Unemployment/reduced income
- Medical emergency
- Job transfer out of town
The seller will need to prepare a financial package for submission to the short sale bank. Each bank has its own guidelines but the basic procedure is similar from bank to bank. The seller’s short sale package will most likely consist of:
- Letter of authorization, which lets your agent speak to the bank.
- Completed financial statement
- Seller’s hardship letter
- 2 years of tax returns
- 2 years of W-2’s
- Recent payroll stubs
- Last 2 months of bank statements
Finch Realty is gladly assisting our clients with putting together the documents required and will provide the sellers with the necessary forms for each bank after we receive your Letters of Authorization. After discussing your loan situation with your banks we can proceed by putting your property on the market and submitting an offer, acceptable to you to the bank for approval.
After the seller accepts the offer, the listing agent will send the following items to the bank:
The Short Sale Process at the Bank
Buyers may wait some time to get a response from the bank. Finch Realty’s listing agents are regularly contacting the bank and keeping careful notes of the short sale process to make sure they can provide the bank with more documents as needed and to get information about the status of the process to update all parties involved. Buyers may get so tired of waiting for short sale approval that they may feel the need to cancel. If buyers are the type with little patience, perhaps a short sale is not for them.
Following is a typical short sale process at the bank:
- Bank acknowledges receipt of the file. This can take up to 2weeks.
- A negotiator is assigned. This can take 30 to 60 days.
- A BPO is ordered. A BPO stands for “broker price opinion,” and it involves using a process very similar to an appraisal.
- A second negotiator may be assigned. This can take another 30 days. Bank is negotiating with Buyer on the price and terms.
- The file is sent for review or to investor for an approval. This can take 2 weeks to 30 days.
From our experience, some short sales get approval in 6 to 8 weeks. Others take 90 to 120 days, on average. Please contact one of our Realtors today to get started with the process. It may looks complicated, but knowledgeable Realtor knows how to make is simple and stress free for you. We look forward to helping you!
Making an Offer on a Short Sale? What You Need to Know
Now you know that if a home is being sold for below what the current seller owes on the property—and the seller does not have other funds to make up the difference at closing—the sale is considered a short sale.
A short sale is different from a foreclosure, which is when the seller’s lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.
You’re a good candidate for a short-sale purchase if:
You’re very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller’s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, the lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take longer for the lenders to approve the sale.
Your financing is in order. It’s important to show you are well qualified and your financing is set. If you’re preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whoose financing is less secure.
You don’t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property—or you need to be in your new home by a certain time—a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.
You are not asking for repairs or repair credits. It is important to know that you will most likely be asked to take the property “as is.” Lenders are already taking a loss on the property and may not agree to requests for repair credits.
The risks of purchasing a short sale are considerable. But if you have the time, patience, and strong will to see it through, a short sale can be a win-win for you and the sellers.
Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.