Ruth Ann Bowe for Santa Barbara Real Estate
More than a Realtor, a Resource!
Short Sales can offer a solution for sellers and an opportunity for buyers, however it is extremely important to utilize a Realtor who understands the process, has experience handling and negotiating short sales, and has the time to do it. Dependent on the complexity of the situation, a short sale can take much longer to close than a typical real estate transaction, sometimes up to 6 months or longer. During this time, the foreclosure proceedings are generally put on hold for short sale negotiations. For more information or if you have any Santa Barbara Real Estate related questions, please contact Ruth Ann Bowe at 805-698-1971 or RuthAnn@SellingSB.com.
What is a Short Sale?
It seems that increasingly homeowners find themselves in over their heads with their mortgages. Some of these homeowners may not be able to fulfill their mortgage obligations. When a homeowner can't make the mortgage payments, is facing foreclosure and the value of the property is less than the loan on the property, the borrower may consider a short sale. This could save the lender the expenses of foreclosure proceedings and from having another property on its books. From the borrower's perspective, the short sale prevents having the foreclosure on the borrower's credit history, and releases the borrower from an obligation that they can't afford.
In essence, a short sale is a real estate transaction subject to a lender's approval in which the lender agrees to a sale of the property for less than what is owed and accepts the proceeds in full satisfaction of the loan amount. A short sale requires much paperwork and preparation on behalf of the seller/borrower. Typically, before applying for a short sale, the seller must have a ready buyer and all the paper work prepared to present to the lender. The buyer of the property must also be prepared for a protracted time period to conclude the purchase of the property.
Generally speaking, the lenders involved in the short sale will require the seller/borrower to provide information to support the need for the short sale, including but not limited to:
1. Hardship Explanation
2. Financial Statement and Supporting Documentation
3. Estimated HUD-1
4. Executed Residential Purchase Agreement
5. Short Sale Addendum
6. Listing Contract
7. Short Sale Addendum to Listing Contract
8. Proof of Open House and Price Reduction History
9. Broker Price Opinion
10. Comparitive Market Analysis
Once these documents are compiled, the presentation and consistent, professional follow up can be key in the success of a short sale real estate transaction.
At Coldwell Banker, we've designed a custom Short Sale Program designed to get the attention of lenders immediately, so that our files are dealt with quickly, rather than going to the bottom of the pile or in the waste basket. We worked directly with Short Sale Negotiators from the major lending institutions to design a program based on their needs: what would they want to see to help make their decisions easier. During times of higher foreclosure rates, short sale transaction pick up and lenders are so overwhelmed, they can't train employees fast enough to handle the volume. Making a transaction easy for them can only help move our tranactions through quickly.
If you own a home and are considering a short sale, I would welcome the opportunity to discuss your options. And as always, it is a good idea to contact a financial advisor or real estate attorney to determine your best situation. For additional resources to assist you, click here.