Short Sale Process

Short Sale Process

Experienced Sacramento Short Sale Attorneys and Sacramento Short Sale Realtors

Learn about short sales and the short sale process by reading below.

What is a Short Sale?

A short sale is commonly an alternative to foreclosure. In order for your short sale to be approved by a lender, you will first have to be in a position where you owe more than your house is worth.

Short selling a property can be a long process because it requires the involvement of so many different parties; seller, buyers, attorneys, real estate agents, tenants (if applicable), appraisers, lenders (senior and junior lien holders), inspectors, escrow officers and title companies and financing parties for the buyer. Read below to find out about short sales and the short sale process.

What Should I Do If I Am Thinking of Short Selling?

The first step is to contact us and schedule your complimentary attorney consultation. At this consultation you will discuss your specific situation and your particular goals and the attorney will give you their advice on strategy and game plan. We will also discussing listing your home for sale and how our affiliated in house brokerage, StoneCrest Realty, can help you with this in order to make the process as simple and straight forward as possible.

The next step in the short sale process should you choose to short sell your property is that we will work on preparing your property to be listed. We will coordinate open houses or showings and collect offers. We will then advise you on the best offer to select. At the same time we will be working with you to gather and prepare the necessary short sale paperwork. We assist you in filling out this important paperwork and an attorney always reviews and suggests edits with all financial worksheets and hardship letters. When an offer has been selected and all of the paperwork has been completed the entire short sale package will be submitted to your lender for short sale approval.

We then negotiate with your lenders, first, second, third etc. There are typically two primary hurdles to short sales. The first is getting bank approval for the sale and the second is to attract a qualified and interested buyer who will stick around. The largest issue with these hurdles is that there is a defined time frame and if the sale is not done in time, the bank may foreclose on the property once payments are delinquent. We will advise you if you are current on your loan on when you should start missing payments. If you are already behind you need to start the short sale process as soon as possible.

In short sales – experience matters, telling the story of why you should be approved as a short sale matters. That is why you hire a short sale attorney who can help.

Short Sale Process-Steps In A Short Sale

There are many steps to the short sale process. We have a detailed step-by-step guide that explains the short sale process that we make available to all of our clients, once our services are retained for us to negotiate their short sale.

The below is a general timeline and outline of the short sale process. Please note that in most cases unless a cooperative short sale is allowed by your investors a valid offer is required to be made on a property first before your bank will review or make any comments on your ability to short sale or the price they think your home should be listed at.

Step 1: Document gathering.

You will need to gather the important documents that the lender will be requiring. Pay stubs or proof of income, most recent two years filed tax returns, most recent 3 months bank statements, most recent mortgage statements, etc. You will also fill in your income and expenses on our draft financial worksheet so that we can go over and verify all of the numbers with you. You will draft your hardship letter using one of our samples and provide it to us in a word document. We will then review, edit and return to you for your review. Revisions of the financial worksheet and hardship letter can go back and forth several times between the attorney and the client before being finalized. This meticulousness and attention to detail is part of what sets us apart and makes us successful.

Step 2: Short Sale Package Submission

Once an offer is received and the short sale submission package is completed and finalized we will submit it to your lender along with an authorization signed by you allowing them to speak with us regarding your account.

Step 3: Ordering and Carrying Out the Brokers Price Opinion (BPO)

Once the package has been received and reviewed typically the lender will order what is called a “BPO” this stands for Brokers Price Opinion. This appraisal is ordered by your lender to help them determine the property value and if the offer submitted is in line with what they feel the property should be sold for.

Step 4: Value of the Property

Once the BPO has been completed and returned to the negotiator, they will have 15 – 30 days to review the file and determine if the offer on the property is in line with their market valuation, (BPO). If the offer is accepted by the lender, the file is forwarded on to the investor/MI (mortgage insurance) company (if necessary).

Step 5: Approval or Denial

The investor/MI company either returns the file as an approved file or they will return the file as a denied file and cite the reason. We then appeal and escalate the file to address the issue and seek to have the file approved. We will write legal demand letters if necessary and point out specific laws which may apply in any given situation.

If the investor/MI counters our offer and we do not accept their offer but instead counter their offer back, the investor can take another 10-15 days to review. If the counter offer is accepted, an approval will be granted and closing will be possible. Your attorney is reviewing any approvals and makes sure they are made in writing and that all relevant details are included and language to protect you is present. If it is not, changes are requested to be made.

Step 6: Inspections and Buyers Appraisal

The buyer will perform their necessary tasks, i.e. inspections and loan appraisal if a loan is necessary. This process usually takes between 35 – 45 days, FHA and VA loans take the longest and are at present time running close to 60 days and almost always require short sale approval extensions. If you received an all cash offer closings usually just take a couple of weeks.

Step 7: Signing at Title, Loan Documentation, Wiring Funds

The investor/MI company will receive their funds when the buyer’s loan funds or in the case of an all cash offer when both buyer and seller have signed all the required documents to transfer title. You will sign final closing documents at the title company where escrow was opened. If someone who needs to sign is in a different location where the title company does not have a location the title company will usually set up the signatures with a mobile notary.

Step 8: Close of Escrow

Escrow closes and if you are still living in the home you need to be sure that you have made arrangements to move to your next home by the close of escrow and have all of your belongings out as the buyer will be anxious to receive the keys and be able to start moving in.

This is a basic outline of the general process and that for each step we are continuously following up with your lender, your agent and the buyer when necessary and of course keeping you updated.

Please be aware that often times the lenders will not move things along as they should and as indicated above in which case we often have to escalate to supervisors, management, etc. This outline makes the short sale process appear streamlined and without complication, however that usually is not the case, particularly with larger lenders or their servicers.

It is imperative and we make sure that we follow up regularly with your lender as well as keep detailed notes about who we spoke to and what they are telling us. Sometimes you can call a lender five times in one day and be told five different things by ten different people. It can take us hours on the phone just to make sure a faxed approval letter has actually been sent to us by the lender. We know when and how to escalate a situation to make sure it gets the attention it needs.

This is why we are here to help you through the process and to escalate things if necessary to make happen what we need to happen in a reasonable time frame. We look forward to working with you and hope that we can take some of the stress off your shoulders as we deal with your lender(s) on your behalf.

We hope you enjoyed learning about short sales and the short sale process.

Experienced Sacramento Short Sale Attorneys

We are experienced Sacramento Short Sale Real Estate Attorneys and Sacramento Short Sale Realtors. We are a unique and powerful combination and can help you with your real estate legal issues and short sales. We have helped thousands of people with pressing real estate issues find solutions and relief through the use of short sales, deed in lieu of foreclosures, strategic foreclosures, mortgage debt settlements and legal real estate review and advice.

Our short sale real estate attorneys have achieved proven results and can give you the great legal advice and strategy needed to get you the results you want. Contact us today to schedule your complimentary attorney consultation by clicking HERE or by calling 916-999-1376. We look forward to helping you with all of your Sacramento short sale real estate needs.

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