I continue to get more questions about how Short Sales work. I am participating in the Short Sale process on both sides of the transaction. I am working with buyers interested in a good deal and sellers needing to get out of a property.
There are 2 key steps for a seller in getting their home listed as a short sale:
Approval to Market Home as a short sale
The bank must agree that they will entertain a short sale offer on a property based upon the seller submitting the information about their financial situation, property information, and a hardship letter.
Approving an offer on a short sale
Subsequent to the approval to market the home as a short sale, the seller can then call the listing a short sale and apply a price to the property. The bank does not review the short sale price unless and until an offer comes in. At this time the bank does either a BPO (Broker Price Opinion) or an appraisal.
Once the bank has created a value to the home, the listing agent can advertise a short sale as an "Approved Short Sale". A bank reserves the right to keep offers coming in while the property is being marketed to ensure they maximize the value and reduce their losses.
Remember there is still an outstanding issue of a deficiency notice where the seller may still be responsible for the loss on the property. The seller may need to be prepared to negotiate with the bank once the offer comes in.
Many times the paperwork does not move quickly in a short sale but that is more bank specific. Generally plan on 3 to 6 months to get a short sale sold.
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