Your Questions, Answered: “What is a Short Sale?” Part 2

Red Robin Group  is here to answer all your buyer-related questions!

Short Sale Scenario – How the Process Works

Hello Everyone! We’re back again with short sales, but this time I’m going to break it down step-by-step with how a short sale works. Starting with what happens before you ever make an offer on a short sale…

1. Seller determines, with their agent, that the property will need to be short sold.
2. The seller prepares the documentation and then submits to the bank for preapproval.
3. Pricing strategy is determined and property is placed on the market for purchase.
4. You see the listing and call me up so we can see the property.
5. You decide you want to go forward with purchasing the short sale.
6. I help you in determining whether or not there are comparables to support the listed price and your offer. If the price cannot be substantiated within a certain percentage of average sold prices there is a good chance your offer or even the list price will not be accepted by the bank. If pricing cannot be substantiated you must be prepared that the sales price may increase.
7. We submit your offer to the seller.
8. Seller talks the offer over with their agent and short sale attorney.
9. Offer is accepted by the seller, and you have a binding agreement.
10. Offer is submitted, along with your preapproval letter, to the bank that holds the first mortgage/ primary mortgage.
11. Be patient…this process can take on average 2-5 months but could be shorter or longer, depending on the bank and any and all junior liens (i.e. HOA liens, Personal tax liens, Equity line of credit, 2nd mortgag, etc.)
12. Bank acknowledges receipt — 10 to 30 days.
13. Bank orders a BPO (Broker Price Opinion) or appraisal — 30 to 60 days.
14. File is reviewed — 30 to 60 days.
15. Negotiator is assigned — 30 to 60 days.
16. Phase II negotiator may be assigned (they will review the investor guidelines with the BPO or appraisal and your offer and make decisions based on all three things) — 30 to 90 days.
17. File is approved or rejected — 30 to 120 days.
18. If your offer price cannot be substantiated they will come back with a counter. You can counter them just like you would a traditional sale. It is not uncommon that the bank will offer little to no money for buyer’s closing costs. This can depend on the bank and what type of financing you have.
19. Counteroffer acceptance or denial — 5 to 14 days.
20. Once accepted you proceed to closing just as you would a typical transaction.

This is not a surefire formula for short sales. There are some short sale programs that take less time and some that get delayed because a junior lien holder will not accept less or agree to a short sale. You can now see why it is imperative to have a knowledgeable agent by your side. Give Red Robin Group a call or email to learn more and stay informed.

posted: Oct 13, 2011 | No Responses

Posted by:  Wakamo & Associates

Melissa Wakamo and her dynamic team of agents and support staff provide buyer and seller clients with exceptional service and proven results. Since the start of her real estate career in 2004, Melissa has proven to be a true advocate for her clients and has consistently performed in the top 1% of agents

“When I started my real estate career, I wanted to work in my local community and get to know my neighbors. Now, I realize how important that local expertise is to our clients. At Red Robin REALTORS®, all of our agents are specialists in working with buyers and sellers in Atlanta’s intown neighborhoods.”

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