Short Sale Negotiation

A short sale process (also known as a short payoff) occurs when the proceeds received from a sale of the home are less than the outstanding balance of the loan(s) securing the property. The seller is unable to pay the shortfall, also called the deficiency balance. This may be because the value of the property has declined or the seller is delinquent on payment and is heading into foreclosure.

To avoid the costs involved in pursuing a foreclosure and the possibility of acquiring the foreclosed property, the existing lender agrees to release the mortgage in exchange for an amount less than the outstanding balance of the mortgage debt. The seller/homeowner can directly negotiate the terms of the short sale process with the existing lender, or through a third party (e.g., a short sale intermediary or foreclosure attorney). From the buyer’s perspective, the transaction proceeds mostly in the same manner as a conventional purchase.

Today, banks and lenders have become somewhat more negotiable when it comes to options for dealing with default including the sale of your home for less than the balance due. Recent changes in corporate policies and efforts by the housing administration have also improved the chance of a approved short sale. For homeowners to potentially qualify for a short sale process, they must:

Hardship

Establish a proven hardship. Not only does hardship open the gateway for the conversation with your lender. A homeowner must first confirm with their lender that the short sale process is an option for them. Each mortgage company is different; so, it’s best to contact your bank and speak with a loss mitigation specialist.

List your property for sale

Banks require you to list your property with a licensed real estate agent specialized and trained in short sales. You cannot list your home for sale by owner. Most banks or lenders require your home to be listed at Fair Market Value for at least 90 days before you can consider a short sale approval. However, each bank/servicer is different.

Consult with a licensed real estate professional specializing in the short sale process for more details on the listing process.

Seek legal help

The otherwise simple process is quite complicated. It usually takes the expertise of experienced professionals or attorneys. Experts can facilitate and navigate the short sale process. Therefore, it is not unusual for you or your real estate agent to struggle with the process. If you need help please contact our office for a free, no obligation consultation.