Short sales are popping up all over the place as homeowners unable to pay their mortgages struggle to avoid foreclosure. Although the short sale has its pluses and minuses, overall it is a good option for all parties. A short sale is when the bank holding the mortgage accepts a reduced amount as payment in full. The seller may or may not have to pay the difference and although it does not save them from losing points in their credit score, it is a faster, cleaner process than a foreclosure and allows everyone to more quickly move on to the healing.
Sellers only have so long to secure a short sale before their house goes into foreclosure. The process usually takes three to six months so there is no room for mistakes. Although the short sale bank itself can kill the transaction through poor management and paperwork being lost, in most cases the home owner is the one who makes the mistakes.
1) Continue to pay your Homeowner's Association fees even once you have stopped paying on the mortgage. Most people do not realize that the Homeowner's Association can foreclose upon the house just like the bank can, and your short sale negotiation is with the bank only. The Association will not take kindly to you stopping payments and will foreclose on the property.
2) Price properly. The bank wants to recoup as much of its investment as it can, but with the prices currently being so low and the inventory of competition so high, they are taking big hits. Advertising the house too high will drive buyers away, but advertising too low will bring in extremely low since buyers have been convinced to low ball everything. There simply is not time in the short sale process to negotiate back and forth. Proper pricing that will get attention and command reasonable offers is the key.
3) Make sure paperwork is filled out properly. Short sale sellers have required documentation of personal information, assets, income, and debt. Incomplete or incorrect information will slow the deal down and possibly kill it. Especially if unrecorded liens are found, such as taxes or unpaid contractors. Don't forget anything!
4) Get an experienced agent. Real estate agents may be eager to jump into this booming short sale business, but their inexperience can cause your transaction to fail. In addition to the agent facilitating the paperwork and communicating flawlessly with the bank, the agent needs to market the home properly. Because there is only a short time to sell the house it needs to be priced right and aggressively advertised.
5) Cooperate! There will be a lot of paperwork and hoops to jump through and they need to be done in a timely fashion. Also, you have to be willing to leave the house for showings. It might be inconvenient for last minute requests, but there is a lot of competition out there and the buyer just might find something else before you can accommodate them. You can't afford to turn sellers away.
Lastly, once you have worked so hard filling out the forms and communicating with your expert real estate agent, kept your house clean and tidy for on the spot showings and secured your buyer... KEEP COOPERATING. It may still take a long time to close so be aware that the buyers may want to come by again and refresh their memories, take measurements, etc. And whatever you do, keep the house nice. The most tragic thing of all is to go through 6 months of hard work and frustration then lose your buyer because the condition of the house diminished before closing.