Understanding Short Sales:
Short sales...you hear the terms every day, but what do they mean? Whether you are in the process of buying a home or you are currently a seller, and struggling to make your mortgage payments, this information is important for you to understand.
A “short sale” is when a lender (or lender’s) agree to accept less than what is owed on the property and release the deed. For example, if you own a home and the current market value is $175,000 but you owe $200,000, the lender (or lenders) agree to accept $175,000 (less costs/fees of the transaction) and release the deed to the buyer.
This process is lengthy and requires a lot of negotiations with the lien holder(s). Communication, cooperation and patience are the key factors in this process. You need a real estate agent who understands the process. It is important that your real estate agent negotiates the options of a short sale with your lender(s) PRIOR to listing your homes as a short sale. An experienced agent in short sales will help you through the entire process, from beginning to end, including obtaining the necessary documents needed from you to send to the lenders.
The time frame of a short sale can take anywhere from a normal transaction of 20-30 days to months. We have heard of numerous transactions that lasted as long as seven months. On a more positive note, we completed two short sales in Twin Falls in July. One closed in 16 days (it was a cash sale) and the other closed in 21 days. The sale that closed in 21 days did have a lender involved, who was obviously on the ball on this one and we have already negotiated the short sale with the lender. Therefore, when the offer came in, the lender was prepared and had it returned to us with approval within twenty four (24) hours.
As agents, we can now search homes for sale in Twin Falls that are in the short sale process. This additional search option is an indication that “short sales” will be a part of our terminology for a long time.
The Steps Involved in a Short Sale!
One of the first steps in coordinating a short sale is compiling the necessary paperwork. This requires some time and understanding from both you and your agent.
As discussed in the previous paragraph, the key factors in a successful short sale are communication, cooperation and patience. It is important for your real estate agent to communicate to you what is needed, how the process works and what to expect. Your agent’s knowledge and your cooperation is the beginning of a smooth process.
Step One is compiling the necessary documents needed to start the short sale process. Some of the items you need to provide are:
Copy of current statements for all lien holder against the property
A hardship letter
Proof of income for the past two months (typically copies of current pay stubs)
Income and expense statements
Copies of your last two years tax returns
Signed authorization for your agent to communicate with your lender
Your agent will explain more in detail what these documents are during your first initial meeting.
For buyers who are wanting in on the short sale properties, remember, when your agent is searching for homes for sale in Twin Falls, they now have the option to search short sales in Twin Falls and outer-lying areas.
What to expect from your Agent in a Short Sale!
If you are looking for homes for sale in Twin Falls, you have heard the term “short sale.” We are certainly no different here than any other part of our nation. Homeowners are struggling and taking advantage of this process. Now we will discuss what your agent should do for you, if you are the homeowner in a short sale or a buyer looking to purchase a short sale property.
First and most important is your agents knowledge and experience with the process (from start to finish) of a short sale. Your agent will walk you through every step of the process. Please remember it can be a timely process. Some things to expect from your agent if you are a homeowner are:
Market analysis of your property including market value, number of competing homes and estimated days on the market
Title search for the property (this will determine the majority of possible liens against the property)
Various documents including a listing agreement, property disclosure, Short Sale Addendums and Third Party Lender Addendums
Communication with all lien holders. This will take place upon the completion of the above and after the first initial meeting with the homeowner. This is where the negotiations begin with the lender. It is imperative that your agent has all of the correct information prior to proceeding to this step in order to request, explain and negotiate the short sale process.
If you are a buyer looking to purchase a short sale, it is important for you to work with an agent who understands the process. Your agent will:
Complete a market analysis on the property of interest to determine the true market value
Research the listing on the property to determine that the listing agent completed all of the above. There is nothing worse than making an offer on a home that is advertising a "short sale" only to find out the listing agent never contacted the lender to determine the possibility of this even happening
Make sure all of the paperwork involved in the purchase and sale agreement is completed, including any and all disclosures and pre-approval letter (if financing is involved) prior to submitting the offer
Constant communication with the listing agent during the transaction process
Review of title commitment to determine what liens are incumbered by the property and obtain written confirmation that said liens will be taken care of at time of closing by seller and or lender(s) involved.
For more information, or to receive a list of short properties for sale in our area, please contact us at firstname.lastname@example.org or (208)737-4201.