Michael Santos

MLB Residential Lending

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You Ask, We Answer: Understanding the Real Estate ‘Short Sale’ and How This Process Works

September 5, 2014 by Michael Santos

You Ask, We Answer: Understanding the Real Estate 'Short Sale' and How This Process WorksA short sale is something that occurs when a homeowner is not able to make the mortgage payments on time due to a financial hardship. Instead of foreclosing on the property after one or more missed payments, the bank may agree to allow the homeowner to turn the home over to the bank, which will sell it to as close to market value as possible.

Here’s what you need to know about how short sales work and what circumstances might call for one.

Step 1: The Homeowner Provides Information To The Bank

The first step in the short sale process is for the homeowner to submit an information package to the bank. The homeowner will provide information such as the reason for the short sale, an authorization letter allowing the real estate agent to talk to the bank, and a financial statement. In addition, the seller may need to provide an HUD-1 statement as well as a list of comparable homes in the area.

Step 2: The Buyer Makes An Offer

Once the house is put on the market, a buyer can make an offer just as he or she would on any other home. The seller will then have the opportunity to accept any offer that he or she receives from a prospective buyer.

Step 3: The Bank Makes A Decision About The Offer

Once the seller accepts an offer to buy the home on short sale, the seller is responsible for sending information about the sale to the bank. Before the sale is finalized, the bank must approve the buyer’s offer. It could take as little as two weeks or as long as 120 days for the bank to approve the offer.

However, not all short sales are immediately approved. The seller’s bank bank might decline the buyer’s offer for one reason or another. A bank may decline a short sale offer if the bank negotiator thinks the house is worth more than the buyer’s offer or if the seller violates a clause in the short sale agreement – such as moving out of the property and violating a clause that states only owner-occupied properties are eligible for short sale.

Buying a home that is being sold as a short sale requires patience and an ability to move at the bank’s pace. Working closely with an experienced lender or mortgage broker may make it easier to get through the process without a lot of hassle or drama. 

Filed Under: Home Selling Tips Tagged With: Home Selling, Short Sales, Short Selling

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Top Loan Originator Since 2001

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Michael Santos NMLS #199875 • MLB Residential Lending, LLC. NMLS# 1101220. Michael originates NJ loans only. MLB Residential Lending, LLC. is located at 51 Commerce Street, Springfield, NJ 07081, 732.243.0140. MLB Residential Lending, LLC. NMLS#: 1101220 is a residential lender, licensed by the NJ Department of Banking and Insurance; licensed by the PA Department of Banking and Securities; licensed by the CT Department of Banking; licensed by the DE Dept. of the Banking Commissioner; and is licensed under the FL Mortgage Lender Service License # MLD1128. All rates are subject to change without notice. MLB in no way, claims to represent or to conduct business on behalf of HUD, the FHA or the Federal Government. This site is not authorized by the New York State Department of Financial Services. THIS SITE IS INTENDED ONLY FOR NJ CONSUMERS.

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