Short Sale from the beginning :- FROM SELLER TO AGENT TO BUYER

·        First thing first, there is going to be a LISTING CONTRACT with the realtor and seller to pursue the deal in the MLS exchange where your deal will be advertised for every agent to see.

·        After the listing is done, we will put a LOCKBOX in front of the property. The lockbox is a computer and provides data to us for following up with agents who show the property. We find a lockbox doubles the showings than a property without one.

·        We will plenty of PICTURES of your property in order to create a virtual tour and showcase the property on television, in print, and online. The better the pictures, the better your chances of selling your home and receiving offers the bank will consider.

·        MLS, Within seven days of obtaining your listing, we will have your property listen on the MLS. A professional style ad will be written, 8-12 pictures will be featured, and link to a virtual tour will be provided. The better the MLS brochures look, the more likely it is that we will receive an offer within our 6 week plan.

·        The SOFTWARE, All of your documents will be scanned into our secure transaction software through which We can provide permission for the buyer, buyer’s agents, seller, seller’s agent, and escrow officer etc. to view and download documents. Your hardship and confidential information will not be shown to other parties besides the financial institutions who hold your mortgages. Everything, including all email correspondence, will be added to the transaction software in order to provide a detailed timeline of all efforts and communication. Marketing links and samples will be uploaded to this software along with all property showings where access was obtained by using the electronic lockbox. Surveys provided by showing agents will be visible to you as well. You will receive a log in and password to log in at your convenience for updates. You will receive continuous notifications with a guarantee of a minimum of once a week updates. If we have no updates from the bank, you will receive that notification with any showings and marketing efforts made in that week. Until we get an offer, we may not have weekly bank updates. If you do not have access to email, you must find a friend or family member who can provide you with this information. Otherwise, please let us know in advance, and we will put you on fax or mail notification.

·        The SHORTSALE PACKET SUBMISSION, All banks are different. Certain banks want the entire shorts sale package up front, while others won’t look at anything until there is an offer. We will submit all information including the authorization to speak on your behalf, the listing contract, and the package when the bank will allow the submission. Proof of all faxes or emails to the bank will be uploaded into the RELAY software for your viewing.

·        The 6 WEEK MARKETING STRATEGY, All short sale listings are put on a 6 week plan from the day their listing is live on the MLS. This plan includes the weekly updates, but more importantly, the 6 week price reduction. This plan is designed to generate an offer within 6 weeks of a live listing. You will receive change orders that require your signature in order to reduce the price.

·        SHORTSALE entire process usually takes 90-120 days.

·        The OFFER, We will explain the offers, what they entail, and what they mean to you. You will have the right to accept, counter, or reject all offers. Proof of offers will be scanned and shown in the transaction software. Our goal is to obtain an offer that proves to the bank that it will be more expensive for them to foreclose than to accept the loss on the provided offer. If the offer is too low, we will need to counter or reject. In some cases, especially where there is a tenant, the price has to be dropped under fair market value to encourage an offer. In this case, we will have to provide proof to the bank that we attempted to obtain a higher offer. This is done providing marketing proof, MLS records, and showing reports.

·        The ACCEPTANCE, Once we have an accepted offer, all information will be submitted to the bank. The bank will require proof of the offer, all counter offers, and a HUD. The HUD basically provides the bank with a bottom line loss when they include the brokerage fees and closing costs.

·        The PROPERTY STATUS, Here is the tricky part. Once you accept an offer, the board of Realtors requires us to list your property as “contingent” in the MLS. This shows other Realtors that your property has an offer. If a buyer hires a Realtor to look up active properties, your property may not show up on their report. This is required to prevent sellers from wasting the time of buyers who would otherwise assume your property is available. We are permitted to continue marketing your property as we had been on TV, Radio, Internet, Print etc. It is only the Multiple Listing Service that requires us to list your property as contingent. During this time we are permitted to receive other offers and send them to the bank as well.

·        The ESCROW, We will require the buyer to open escrow within 24 hours of your signed acceptance. The earnest money check is cashed and held in a bank account assigned to the title company. In most cases, the offer provides the buyer with financing contingencies that entitle them to a refund if they lose their financing. In addition, they will have a due diligence process (explained on the next item) that allows them an exit strategy due to inspections etc. That being said, both parties to have to sign a cancellation of escrow in order for the buyer to obtain a refund. You have legal rights as well and will have the right to refuse the reimbursement with your legal representation. The Escrow officer will be determined in the contract. Nothing will be done without both parties agreeing, that includes the actual closing of the home.

·        DUE DILIGENCE is the process where the buyer investigates everything they need to know, in order to make an educated a decision about the condition and whereabouts of the property. This includes inspections, investigations of nearby schools, worship, and other buildings or services pertinent to the buyer, home owner’s association’s amenities and regulations, and property inspections. The length of due diligence is determined in the contract and is typically 10-15 days. The buyer has the right to withdraw their offer and obtain a refund of earnest money within that due diligence process. After the due diligence process is complete, only finance contingencies, or the sellers failure to perform (honor the contract) would entitle them to a refund, unless otherwise agreed upon in the contract. In a “normal” transaction, due diligence would begin on the date the contract is signed. In a short sale transaction, due diligence (unless otherwise stated in the contract) begins upon written bank approval of the short sale financing contingency. In other words, approval of the short sale.

·        The BANK PROCESS, Once the bank receives the offer and the shortsale package, they begin their procedure. The appraiser will valuate your property based on the condition and nearby sales. The second is a Brokers Price Opinion, more commonly know as a BPO. The BPO is ordered from a non-affiliated real estate agent. In most cases, especially if your property is occupied, they will only do a “drive by” obtaining exterior pictures and statistics for the bank. The bank will then assign these values to a negotiator. The negotiator will then determine if the offer is acceptable. If you have multiple mortgages, this process has to be completed with each bank.

·        The DECISION,  Most of our short sales are being approved, but new rules and regulations are put into play everyday. The most common reason for denial is liens. If you have not paid your HOA dues, you will be unable to pass a free and clear title if they have placed a lien on the property. We strongly encourage you to keep your HOA dues current. If there is a mechanics lien, it makes it difficult, but not impossible to close. If the offer obtained is high enough, and the bank is ultimately receiving their “bottom line”, it might be paid. Another recent struggle is the 2nd or 3rd mortgage. In the past, the additional mortgages would take $1,000 and write it off. Today their tougher. We must get all mortgages to agree. Without their approval, we have no sale. Some banks have a standard (we won’t take less than ___dollars or ____percent of the sales price) and some are more flexible. We won’t know until we get into the details. Once the bank(s) approve, they will give us a written approval with terms. You still have to agree to sell. If you don’t agree with their terms, you don’t have to agree to the short sale either.

·        The COMMISSION,  This is the good news. You do not pay the brokerage/agents commission, the bank does. The goal here is for the loss of your home to be your entire expense. Although we have a transaction fee, we ask the bank to pay that as well. The only thing you may have to pay is liens or HOA arrears if they can’t be negotiated.

·        The Closing – This is the best part. Once the acceptance from the bank is handed down, the HOA (home owner’s documents) package is approved, and the due diligence is completed, the buyers & sellers are brought into the Title Company to sign all documents. The buyer’s funds are deposited (usually within 24 hours – 72 hours of signing), the deed is recorded, and you are done. You must vacate the property PRIOR to closing. In our experience, it is best to vacate the property 72 hours prior to closing (provided both parties have signed). This allows the buyer to complete the walk through on a vacant property. This is not required, just suggested. We suggest you have all utilities scheduled for shut off on the next MONDAY after closing. This way, if there is an extension , you are not in the property with no power, gas or water. Please remember to forward your mail to your new address.

·        This is the general process of transaction; hopefully this “SHORTsale” wont take that LONG as the banks are trying to improve their process through time.

Positive

• Avoid Foreclosure – Foreclosures can be a very hard and stressful process for everyone.  It might take anywhere from six to twelve months even for a foreclosure to complete.
• Being proactive – Facing your Las Vegas foreclosure will help give you some control over the process.  By choosing a short sale, finding a buyer and negotiating terms with the bank, the huge effect on your credit score by a foreclosure can be dodged.
• Start over faster – Minimizing damage to your credit score can help you get back on your credit feet faster.  You’ll be eligible to purchase another house faster than if you entered foreclosure according to major lenders.
• You might not owe anything after the Short Sale – Your agent can try asking the bank to cancel your debt altogether.  It does happen, but not all the time.
• You won't need to pay large monthly mortgage payments
• The bank may forgive the difference in debt between what you owe and the final price.
• You can avoid the time consuming and traumatic foreclosure proceedings.
• Your credit score will usually recover more quickly than a foreclosure
• You are more likely to avoid bankruptcy
• You may not be taxed on the debt forgiven.
• If you are not able to pay the mortgage premium, or work with the lender on getting a loan modification, a short sale is probably the way to go…even though it means losing your home and investment.

Negatives:

• There will be damage to your credit – When a short sale is completed, it is still recorded on your credit but should have a lesser impact as a foreclosure for most creditors.  Although lenders will consider a short sale similar to a foreclosure, The chances of getting a home loan will still be slim for a bit.
• Tax Consequences – Talk to your accountant to see if you qualify for the Mortgage Forgiveness Debt Relief Act of 2007, no taxes are owed on the forgiven debt.
• Bank Could Demand a note or some payment – The bank is not forced to forgive the debt.  They may ask you to pay them back for the difference on the sale and what is owed on the mortgage, but you’ll need to agree to this. 
• The mortgage holder/lender does not have to say yes to a short sale
• You must prove a hardship that prevents you from making your payments.
• A short sale is not short. The time depends on how quickly you and your agent put together the hardship package, and how quickly the lender reacts
• Lenders are known for taking a while to approve short sales.
• If your home has liens, each lien holder/lender must be consulted.
• The successful transaction depends on a good offer from a good buyer.
• The real estate agents involved will usually get a smaller commission.
• You may be asked to sign a promissory note for the debt forgiveness for approval .
• Lenders may seek repayment of the debt forgiven after the short sale is completed.
• Your credit score is going to take a hard hit. Consult tax and legal advice.
• You could be taxed.  Consult a tax professional.

Contact me for any shortsale questions, I am an experienced agent in shortsale.