The most critical item in a Short Sale process is communication.  Be honest with yourself and your Realtor on the notices you have received and how far behind you are on your mortgage.  This is critical on how we proceed with marketing and obtaining a contract for your home.  When your home is listed, we will gather  information from you including a hardship letter, authorization letter, government forms dependent on the ownership of the loan, tax returns, bank statements and pay stubs.  Upon the receipt of a sales contract, all of these documents are submitted to your lender along with the contract.  We find that it is best to have you gather these documents prior to putting the home on the market so we can immediately send in a complete packet once the contract comes in.  Contact Us for a packet.

From the time of the complete contract packet submission, your lender will review all financial documents and determine if they will accept the contract offered.  They can accept it, counter it with a higher purchase price, or deny your participation in a Short Sale.  This process can take up to five months.  During this time, your lender will also do a BPO (Broker’s Price Opinion) which gives the lender a fair market value for your property. Once a Short Sale is accepted, it transacts just as any other real estate closing does.  The buyers will perform their inspections, appraisal and go through the usual lending process, which is typically another 30 days.  So a Short Sale usually takes about three to six months.  Although buyers perform inspections, it is understood that the sellers are not in the position of making any repairs due to their financial situation so the home is sold As Is.

Once the Short Sale is closed, there will be tax forms generated for the amount of deficiency forgiven  (if any).  This is taxed as INCOME. You should call your accountant prior to starting this process to see how the current tax laws will affect you.