Know How Real Estate Short Sale Works

Some of you are possibly thinking what short sale is all about and how does it work. This article tells you more about the short sale process. This gives a thorough explanation on procedures in a short sale business from the short sale request of the seller to the bank for its approval to the short sale request.

What is a short sale? Short sale is real estate sale in which the sale profits fall short of the balance payable on the loan of the property. This occurs when the borrower either has a hardship or the borrower owes more on the mortgage than the home is worth. In this case, the bank would decide to sell the property and it would need both the party’s permission for the short sale to avoid foreclosure.

During a short sale process, the borrower or the seller of the property would first need to prepare a financial package to be submitted to the short sale bank. The package comprises the letter of authorization, which enables your agent to converse with the bank, HUD-1 or preliminary net sheet, a completed financial statement, the hardship letter of the borrower, 2 years of tax returns, two years of W-2s, recent payroll stubs, last two months of bank statements, and the comparative market analysis or list of recent comparable sales. After the package has been submitted to the bank, the bank will then seek prospective buyers of the property.

If a buyer is keen on buying the property, he will then be required to send a short sale offer letter to the bank. Once this is done, the bank would negotiate with the seller. If the seller accepts the offer, the listing agent will send the listing agreement, executed purchase offer, the pre-approval letter of the buyer and copy of earnest money check and the short sale package of the seller to the bank. The bank then processes the short sale.

The bank first acknowledges the receipt of the file. This may take 10 days to a month. Subsequently, a negotiator is assigned to take charge of the negotiation. Then, a broken price opinion is ordered. The bank will probably decline to share the results of the BPO. Then, the file is sent for review or to the pooling service agreement. This may take another two weeks to thirty days. After the file has been reviewed, the bank may then call that all parties sign an arm’s-length affidavit. The bank, finally issues a short sale approval letter.

It takes much time for a short sale to be approved. This is the main reason why most of the buyers call off their short sale transactions. Buyers may get tired of waiting a very long time to receive a response from the bank. Thus if you are a kind of buyer with a little patience, perhaps short sale is not for you.

Short sale is a business that needs to be studied first before you engage on it. You need to have a good agent who fully understands this process. Adam Alcaraz, of Orange County real estate would want to help you on your short sale worries. Adam has been an Orange County short sale agent for 15 years and has been successfully handling short sales in all the cities of the Orange County.

To find your greatest resource to aid your efforts in Short Sale visit http://www.ocshortsaleco.com . The website is filled with a wealth of data of interest to anyone considering a short sale. Adam Alcaraz an Orange County real estate agent provides a portfolio of many recent short sale transactions along with answers to the most common questions asked by those in this situation. He is ready to answer your short sale questions too. Call him now: (877) 511-2611.