What is a Short Sale?
Frustrated? Worried? Not sure what to do? What do you do when you are behind in your payments and unable to keep up? The bank has denied you any and all avenues of repayment or resolve. You may find you are in unfamiliar
territory and not sure what to do. You may wonder who to call first – the attorney, the accountant, or the Realtor.
If you are a homeowner and find yourself in a situation where you owe more money on your home than what it is worth, finding it difficult to maintain your monthly mortgage due to a financial hardship and need relief, you may be interested in pursuing a short sale solution. Basically, a short sale is a type of real estate transaction whereby the financial institution (or institutions in the event that there is a 2nd line of equity) allow you, the homeowner, the opportunity to sell the property at fair market value with the possibility of settling the debt of the balance owed. There are many more complexities, but this is a brief definition. Please contact Express Brokers Realty for a confidential meeting to discuss your options.

Short Sales in the Current Market
Our current real estate market is moving towards more and more short sales (homes where the payoff amount is higher than what the home may sell for in today’s current market), home owners find themselves in financial hardships. In the Washington Metropolitan area , we are looking at an alarming 60% of homes selling at or above city assessment and 0% in a short sale scenario.

What this means to you is that with the number of short sales on the market, it would be near impossible to ignore them. With so many financial institutions leaning towards partnerships with 3rd party mediators, and multi-step
computerized software streamlining communication from agent to the financial institution, the ease of processing short sales and efficiency in moving through the escrow phase is becoming more prevalent.

However, with this being said, there are still many complexities that are beyond the skill set of the average consumer, placing a greater responsibility on the part of the Realtor to provide excellent service and keen negotiating skills in order to successfully close on a short sale. Negotiating with a bank and leveraging in an
effort to seek a non-promissory status for the Seller is crucial. It is a very difficult task to keep everything balanced and still assist a homeowner in finding

Short Sales in the Current Market
Our current real estate market is moving towards more and more short sales (homes where the payoff amount is higher than what the home may sell for in today’s current market), home owners find themselves in financial hardships. In the Washington Metropolitan area , we are looking at an alarming 60% of homes selling at or above city assessment and 0% in a short sale scenario.

What this means to you is that with the number of short sales on the market, it would be near impossible to ignore them. With so many financial institutions leaning towards partnerships with 3rd party mediators, and multi-step
computerized software streamlining communication from agent to the financial institution, the ease of processing short sales and efficiency in moving through the escrow phase is becoming more prevalent.

However, with this being said, there are still many complexities that are beyond the skill set of the average consumer, placing a greater responsibility on the part of the Realtor to provide excellent service and keen negotiating skills in order to successfully close on a short sale. Negotiating with a bank and leveraging in an
effort to seek a non-promissory status for the Seller is crucial. It is a very difficult task to keep everything balanced and still assist a homeowner in finding a new residence.

Short Sales are often cumbersome. It requires a strong skill set of attention to detail, proficiency, strong negotiating practices, compassion and understanding. It should be properly planned and executed with the utmost discretion. For military members, there are guidelines, such as the Soldiers and Sailors Civil Relief Act that will provide immediate relief to the military member and protection of their rights. It is very important that you have a Realtor who has in depth knowledge about these laws and the ability to guide a Seller through the process.

Understanding the Pros and Cons of doing a Short Sale
There are many factors to consider when deciding whether or not to move forward with a Short Sale. It is a decision not to take lightly. And it is a far better decision than walking abandoning the home.Often times, Financial Institutions, in lieu of additional expenses, will resist a possible foreclosure in favor of a Short
Sale. This will greatly ease the burden of additional fees for you in the long term.

What are some of the positives to buying a short sale?
No Foreclosure
Foreclosures can be an extremely distressing process for a family. It can take anywhere from six months to over 2 years for a foreclosure to complete. You can opt to file a deed in lieu of foreclosure or seek the assistance of a qualified Realtor in pursuing the Short Sale process.Maintaining a consistent communication with the financial institution(s) will provide some relief and control over the situation. By opting to seek a short sale, you lessen increased financial burdens, increased hardship, more damage to your credit report, and ability to cancel a loan that has caused significant financial hardship for you and your family.

Skilled Professionals will work with you at no charge
Yes, it is true. Why would a Realtor assist you in processing a short sale transaction knowing that you do not have the ability to pay them for their valuable time and services provided? Realtors do make a commission when
selling a short sale, although it may be a lesser amount than what they are used to, they still receive some sort of payment. With the real estate market having been flooded with several hundreds of short sales and foreclosures, it is becoming inevitable for a Realtor to avoid short sale transactions. Also, Realtors understand the process, they empathize with the homeowners and many Realtors truly care about helping people with their real estate transaction, irregardless of the type of transaction. Improving the real estate market is always in the best interest of the Realtors.

Minimizing damage to your credit score
Proceeding forward with a Short Sale is a far better plan than abandoning your home or risking Foreclosure. A Short Sale can have far less damaging effects to your credit than a Foreclosure. And the ability to bounce back and purchase a new home with a new mortgage after a few years is realistic and something to look forward to. Through placing specific language into the contract, you can avoid repayment of the difference owed to the bank through a promissory note or repayment plan.It will require Realtor with a strong skill set and experience
in processing short sales.

If you are an active duty military member who had to sell their home through the Short Sale process, you may have special benefits through the Veterans Affairs that will make the process less damaging on both your credit and
eligibility status. Contact your Veteran Affairs regional office for further information or contact Express Brokers Realty for a confidential appointment to discuss these additional benefits.

You do not have to be in default to qualify for a Short Sale.
This is a misnomer. You do not have to be in default to get approved by your financial institution for a short sale. Being late >30 days, >60 days, and >90 days is what causes most of the damage on your credit report. If you find yourself in unfamiliar territory and facing significant financial hardship making it more and more difficult to maintain your current monthly mortgage, contact Express Brokers Realty to discuss the possibility of a Short Sale . We have helped many homeowners in the past initiate the paperwork through their
financial institution to stop a foreclosure and start the short sale process. And through the cooperation of some savvy Mortgage Officers have had the pleasure of helping people keep their homes through the Loan Modification process.

You may not need to pursue a Bankruptcy
A bankruptcy can be very damaging to both your credit and future applications for credit. Creditors will want to know if you have ever had a bankruptcy in your lifetime. In fact, many employers are leaning towards background investigations and will want to know if you have filed bankruptcy or experienced a foreclosure. It is your right to not provide such details, however, it may cost you a really great job.

By pursuing a Short Sale, you can possibly escape the need for filing bankruptcy. This will help your credit in the long run as well as your future employment.

The many Cons of processing a Short Sale
The financial institution(s) may refuse to grant the Short Sale. Your credit may suffer greatly. Your financials will be under a microscope by the financial institution and you will be required to submit all your confidential financial information to your Realtor or Representative processing the Short Sale on your behalf. Keep in mind, that Realtors are very familiar with this process and respect your privacy immensely. Your file is handled with the utmost discretion at all times and is held under lock and key.Realtors have a fiduciary responsibility to look after your best interest at all times. Also, it is wise to work with an Agent or Realtor that understands the rules and regulations of the Multiple Listing Service. Sometimes advertising your home as a Short Sale can slow the progress as many buyers are unwilling to view Short Sales. However, it takes just one buyer to fall in love with the features of your home, short sale or institution and you will be required to submit all your confidential financial information to your Realtor or Representative processing the Short Sale on your behalf. Keep in mind, that Realtors are very familiar with this process and respect your privacy immensely. Your file is handled with the utmost discretion at all times and is held under lock and key.Realtors have a fiduciary responsibility to look after your best interest at all times. Also, it is wise to work with an Agent or Realtor that understands the rules and regulations of the Multiple Listing Service. Sometimes advertising your home as a Short Sale can slow the progress as many buyers are unwilling to view Short Sales. However, it takes just one buyer to fall in love with the features of your home, short sale or not. The Real Estate Information Network states very clearly that once a short sale is approved it must be listed as such in the MLS. However, a Short Sale is only approved when the bank send the approval memorandum. It would be entirely up to the homeowner if they wish to advertise their home as a Short Sale prior to this memorandum being issued by the financial institution. This is a very important detail to consider when marketing a Short Sale, and one that is often overlooked.

Property Condition
Banks typically will not make repairs. However, it is not impossible to negotiate this. There have been properties, on a case by case basis, that have had repairs made by the bank in order to proceed forward with the sale. This is also true of tax liens and other liens against the property. Banks will sometimes negotiate to
pay a portion of the liens in order to liquidate the asset. This is another reason why it is so important to have a skilled agent working with you. Any damage to the property that will be required by the buyers lender to be repaired will have to be negotiated and either the homeowner, buyer or financial institutions will have to make the necessary repairs in order to move forward to a closing.

Another factor to consider is that it may be a crime to remove certain appliances from the home.You may want to consider this before removing anything from the home. Understanding what appliances are considered personal property and which are not will greatly help you make this decision.

The “wait period”
With the damage to your credit, you may have to wait 2-3 years before being eligible for some types of loans. Wherever you move to during this “wait period”, keep in mind the importance of paying your bills on time. This includes utilities and other types of loans.

Tax Consequences
There may be tax consequences. The financial institution may forgive the debt and will issue a 1099 for the amount of debt forgiven. This form is sent to the IRS to allow the bank to write off the loss. The IRS treats the forgiven debt as a taxable income which means you will need to pay taxes on the amount owed. Look for this notice as it may take more than a year for this to be processed. Consult a tax accountant or the IRS for details on legislature involved with a Short Sale.

It is strongly recommended to negotiate into the contract a provision that states that the sale is contingent on the financial institution not seeking repayment or a promissory note. This clause may be helpful for the Seller, but may possibly and will issue a 1099 for the amount of debt forgiven. This form is sent to the IRS to allow the bank to write off the loss. The IRS treats the forgiven debt as a taxable income which means you will need to pay taxes on the amount owed. Look for this notice as it may take more than a year for this to be processed.
Consult a tax accountant or the IRS for details on legislature involved with a Short Sale.

It is strongly recommended to negotiate into the contract a provision that states that the sale is contingent on the financial institution not seeking repayment or a promissory note. This clause may be helpful for the Seller, but may possibly harm a Buyer, so be sure you understand what this statement means before signing a contract. It should be explained to you and clarified in detail. Basically, a Seller can choose not to continue with the short sale and allow the home to go to foreclosure if the financial institution refuses to accept this clause. It may
compromise the transaction and any monies invested by either party to the contract. For more information, please contact Express Brokers Realty to arrange a confidential appointment to discuss your options.

A Short Sale is not always SHORT
A short sale is not short. It is a long process and largely dependent on the submission of a thorough and complete package being sent to the financial institution(s) and in a timely manner. Ensuring that you communicate promptly
with the bank, submit responses quickly and accurately are a must. Being detail oriented is a necessity.Processing a Short Sale is a very serious transaction and requires a skill set beyond that of a typical Realtor. It is god to ask your Realtor how many Short Sales they have processed and how many years they have had processing short sales. However, keep in mind that some Agents are more advanced learners and although they have not conducted numerous short sales, they may have had the ability to learn in great detail valuable information that is required to process a successful transaction.

Many Agents are unfamiliar with the portals and computerized databases and systems in place by 3rd party vendors contracted through financial institutions top process short sales. Financial institutions are inundated with thousands of short sale files and may not be able to efficiently process them all in a timely manner. Using a 3rd party vendor is common practice and the comprehension and ability to maneuver through these computerized systems is a must.

There are so many details involved – more than what the average homeowner is aware of. It would be my pleasure to meet with you to explore what possibilities best fit your needs. My goal is to help you through the Short Sale process and assist you in placement into a new home that meets your criteria.

Here are some more negatives to purchasing a Short Sale
+ Time

Short sales may take as long as 6 months to process. However, financial institutions in an effort to streamline the short sale and pre-forclosure process are seeking the services of 3rd party vendors with high technology computer software and integration, increasing the communication between the Seller and/or their representing Agent or Broker and the financial institution.

+ Property Condition
The home may be in excellent condition and well maintained or it could be completely trashed with missing appliances.

+ Bank Approval or Rejection
The bank could require the sale and move forward into foreclosure proceedings. e homeowner to commit in writing to a promissory note to repay the bank for the debt. The homeowner may or may not decline. If the homeowner declines,
the bank may refuse to approve the short sale and depending on the verbiage written into the contract you may be out of pocket any prior investment in the form of a home inspection, appraisal fee, brokerage retainers or other monetary proceeds.

+ Unexpected Foreclosure
Unfortunately it has happened. Banks have been known to foreclose on a property while in the midst of short sale proceedings. It has much to do with the left foot not telling the right foot when to take the next step. Allow me to explain, when you are behind in your mortgage, the foreclosure department may periodically evaluate your account to determine if the bank should foreclose. The Short Sale Department may not communicate your actions to the foreclosure department and so, unfortunately, foreclosure results. Never allow anyone to tell you not to communicate with the financial institution(s) that hold your mortgage note. Every month, you will want to call in and check to ensure that your home is not in a foreclosure status.The worst thing you could do is not communicate.

+ Multiple Offers
The Seller in a short sale situation requires bank approval in order to proceed to escrow. It is in the Sellers best interest to accept an offer that is much higher and closer to the payoff amount, so as not to be considered for a promissory note. Thus, the Seller will want to submit all offers to the bank and allow the bank to choose which offer they would like to negotiate on. Many Buyers do not like this aspect and therefore are unsure of pursuing a . short sale. It may take weeks to months before you find out that the bank has rejected your offer in
favor of another offer. And there is no recourse for any monies invested.

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