The Short Sale
Seriously, short sale should be called the long sale, because they take forever. In actuality though, they are so named because the lien holder/s need to agree to take less than they are owed – a short payoff- to release the property to the new owner.
I have assisted three owners with short sales in the past fifteen months. These are difficult though rewarding transactions. In every case, I have helped an owner who found herself (one was a couple, but she did most of the work in making the sale happen) upside down on value and seriously behind on her payment. There are numerous factors that can get an owner to this point – the recession, adjustable rate mortgages, negatively changing home values. It happens. Fortunately, there are some good programs out there to help clients.
The case for the HAFA short sale
In each case, my client really wanted nothing more than to be rid of the property and have an opportunity to start over. In listing the house, we worked with a government agency called HAFA which offers a Keys for Cash program. Through this program, I was able to secure some funds for each client at closing – funds used towards a security deposit on their new home and the first few month’s rent.
Managing expectations in a short sale
Sellers need to be prepared for a great deal of work. Banks want to know about the owner prior to releasing the deed. Tax returns, pay stubs, checking and savings accounts, utility bills – all are requested by banks prior to making a decision. And owners needs to be prepared for numerous showings – even more than in a traditional sale. Plus, banks can take a long time to approve a short sale, so owners need to be patient under trying circumstances.
Buyers meanwhile also need to be patient, waiting to hear if they are truly under contract. It is not uncommon to wait thirty, sixty or even ninety days to hear a response from the bank (lien holder) regarding an offer. Banks will run BPO’s – Bank Price Opinions, with multiple agents to ensure the sales price is fair.
Time moves slowly in a short sale
The short sale takes a long time to complete. Buyers need to understand, that unlike a traditional transaction. Time comes into play, it might be weeks or even months after submitting the initial offer before the bank holding the primary lien accepts, counters or rejects the offer. If there are multiple lien holders, the time can get really lengthy as each lien holder performs a BPO with its own agency. In a normal transaction, buyers usually know within 36 to 72 hours if they are under contract and can close in a month or two. But with a short sale, it can take two months just to know the bank is working on the transaction. This can be disheartening for a buyer who wants to make a move, take advantage of low interest rates and be in their new home for a holiday or job.
Assisting clients in a short sale is rewarding
I mentioned though the sales are rewarding. Last year I was able to assist Ms. E, who once freed of the debt and anxiety was able to start a new adventure in life. Then there was K & J and family. They were able to move down the street to an equally nice, if smaller, home with a lower rental payment. Their children were able to continue at school as though nothing had happened and because a short sale only impacts your credit for three and a half years, they are already saving to purchase a home again in the near future because it is important for their family