San Diego Short Sales: The Government Short Sale Program

This awesome article talks about The Short Sale Process - how does it all work, what is expected of you and the timelines and everything of that nature? The first thing you want to do is have a consultation with a real estate broker such as myself who’s extremely experienced in dealing with these. I’ve done hundreds and hundreds of short sales so I typically know what a scenario outcome’s going to be for each individual based on their case. Some people speak with a real estate agent who says they’ve taken one class or done one or two short sales with a particular bank. That doesn’t mean they’re going to know what your outcome is and instruct you and go over exactly how your situation is going to play out so it’s best to work with someone who’s extremely knowledgeable and extremely experienced in this. From there, you’d want to work with somebody who would also point you in different directions such as a bankruptcy attorney or an accountant or somebody else or real estate attorney who can talk to you about all of your other potential options; people who are very familiar in this marketplace on these particular types of transactions and options available to you.

Once you make that decision and you’ve been well-informed into the implications on whether or not you’re going to have to pay taxes and you make that decision to move forward, then you choose your broker. Once you choose your broker, what will happen is this: he will put your property on the open market just like a traditional sale. It’ll go on the MLS. There will be signs. There’ll be fliers. They’ll do all kinds of Internet marketing and basically, what we have to do is market it to any type of buyers until we receive an offer on the property. Once we receive an offer on the property, what we need to do then is take that offer along with a significant amount of financial information about yourself or the homeowner along with some paperwork that is required on my end such as listing contracts and government short sale HAFA program paperwork. That’s included as well. We take all of this information. We put it together in a package. We take that package and we submit it off to each of your lenders or one if you just have one. Send the package off to the banks. From there, the average turnaround time for a bank to make a decision on a short sale is about 90 days. What the banks do during this 90-day process are two things: one, they’re going to review all of your financial paperwork and read over your hardship to determine if you’re a viable candidate for a short sale and if they’re going to allow you to do a short sale. The second thing they’re going to do is send out an appraiser to the property to determine what is it worth. Basically, they want to know how much is the home worth today so that they can wait against the offer that we’re bringing them – how much is it worth and how much are we being offered?

From there, the real estate broker or whoever is negotiating the short sale for you will go through a negotiation process with each of the banks. This is where we negotiate terms of the offer, where we negotiate, how much each bank’s going to get paid out if there are two involved. We have to negotiate deficiency on whether or not you’re going to be responsible for having to pay any money back to the bank. That typically goes on for a period of time and this is really where the expertise of a short sale broker can help you out. If your real estate broker does not have a lot of experience then you’re not going to have a lot of leverage on your side and they’re not going to have a lot of experience to get you the best possible outcome.

From there, once the bank makes a decision, what they will do is issue what’s called an approval letter. If you’re dealing with two banks you need to get two approval letters. From there, what will happen if you work with me is we give you these approval letters and allow you the opportunity to review them with a real estate attorney or you can sit down on the phone or sit down with them and have an attorney explain to you exactly and clearly what it means to you or what other viable options might be if you don’t like the terms of the short sale. Again, if for any reason you don’t like the terms of the short sale approval letter we can either one, go back and negotiate to the bank or you can simply cancel. You don’t owe me anything and you can do something else with the property. You can let it go to foreclosure. You can file bankruptcy. You can do a loan modification – whatever it is you want to do.

The average time frame for a short sale to be completed with an average real estate agent can be anywhere from six to ten months. That’s due to the lack of experience, due to the lack of connections or relationships they may have with the bank and so it can take a substantially long period of time. My average turn around time is about four months from start to finish and that’s we have systems in place and relationships with the banks and have done this a lot of times and so we kind of know some of the tricks of the trade. That’s the little bit in-a-nutshell how the process works, how it’s going to evolve in the time frames that are involved in doing a short sale. That’s been the process portion of our video consultation. Thank you.