Short Sale DETAILS, Detailed

Selling a short sale is a totally different thing than selling a standard sale.

Your agent for both buying and selling needs to fully understand short sales. If they do not you may be financially harmed.

Don't do a short sale or purchase a short sale if you don't understand all the emotional, monetary and instability that a short sale will bring.

Pricing- the price a short sale is listed at is set by the seller, though the bank may have previously approved the price things change every time a new offer is presented or a current value expires. A "good deal" is a fantasy until the bank approves that price in writing. Don't get fooled by price.

Maintenance Issue's- Sellers in short sales are emotionally and financially burdened. Some have personal issues or health issues. All are losing their home. The usually don't have the means to maintain the home. The condition may be poor and get worse throughout the process. Items like utilities, HOA payments and such may become a problem for them. Therefore a buyer needs to understand and be prepared for getting utilities current, taking over the costs, paying for appraisal condition repairs them, AS-IS sale, unexpected repair and financial costs.

Conditional issues- condition may be poor, or distressed. Properties may be vacant. The bank may at any time change the locks or shut off the water & winterize the home. Getting that reversed required a licensed plumber and will likely become the buyers cost and responsibility. If the locks get changed a HUD key will open the door.

Personal strain- As previously stated sellers in short sales are emotionally and financially burdened. Some have personal issues or health issues. All are losing their home. The usually don't have the means to maintain the home. Some get hostile or very upset when a buyer seems to be happy to be getting the property at such a great deal. Please be sensitive to the fact that the sellers are losing their home and being displaced. Their home ownership dream compromised and they are sad, angry and need to be respected.

Instability- nothing is for sure until in writing, then the process still needs to be monitored and bad things can still happen. Foreclosure date may be posted, unforeseen items can arise. All parties need to be focused until it’s a matter of record (closed & recorded).

Inexperience or lack of information- the list agent MUST be skilled! The entire process rests in their hands. FULL disclosure is required. If they don't know what they are doing, are seemingly untruthful or don't communicate things that the seller and buyer need to know then DON'T place on offer on that home or list with that agent. If you have a family or friend that's a realtor and you feel badly not using them simply pick the BEST agent for the job and ask that agent to give a referral fee to the friend. That keeps the love alive and prevents a lot of problems.

The WAIT- Short sales take forever. There are great big gaps with no news. Don’t show buyer short sales that needs to be in a home in 4o days. Don't get hostile with a listing agent that is dealing with the bank. Even the best SS agents can speed up most of the steps. Also a guesstimate on time is just that. There are so many steps and phases that have so many different departments and people involved. Be patient or don't get involved with short sales.

The investor put up the money for the loan; examples are Fannie Mae, Freddie Mac, FHA-HUD etc.

The investor takes to loss in a short sale, not the servicer.

The Servicer is the institution that services the loan; examples BAC, Provident, Chase, Wells Fargo etc.

IF you have PMI or mortgage insurance the mortgage insurance company takes the loss in a short sale, not the investor. They may share the loss though.

Mortgage insurance is not hazard insurance or property insurance. It was an insurance policy the lender made you take out to protect the mortgage company and investor from your default. It was put into place because you put too little down or nothing down when you purchased.