The short sale process can vary by case, but it generally works like this:
1) The lender is contacted to discuss the possibility of a short sale and to determine the lender's process for completing the sale.
2) The seller issues a letter authorizing the release of personal information about the loan and the property to the buyer or escrow agency.
3) The lender will review a settlement statement, which will indicate the proposed selling price, remaining loan balances and itemize all expenses, including real estate commissions and other fees and expenses associated with the closing.
4) The seller will complete a "hardship letter," which will detail and explain all financial difficulties. Lenders will usually want to validate the seller's financial situation by looking at bank statements, investment accounts, along with examining pay stubs and other financial records.
5) The lender will then look to the broker to provide a price opinion by examining the condition of the house and the market value of comparable properties.
6) The lender will then want to scrutinize the purchase agreement to determine if all amounts are reasonable and the real estate commission is acceptable.
Because of the documentation required, the short sale process can be lengthy and usually takes 90 days. But if done correctly, it can work well for all parties involved. The lender avoids the uncertainty of the foreclosure process, the seller avoids a foreclosure on his or her credit report, and the buyer hopefully got a good deal on a property.
As you may know, our service does not require any upfront fees nor is there any charge to the Seller, Buyer, Realtor or investors. We negotiate our fees with the Lender and it is up to them to approve them. The entire commission that gets approved by the Lender, will be distributed between the Listing and Cooperating Agents.
Considering the complexity of the short sale process, understanding this process is of utmost importance. If considering a short sale, make sure that you discuss your situation with a real estate lawyer. The more informed you are on the process, the easier the transaction will be, and the better the impression you will make on the lender.