How To Short Sell

Search San Diego County Foreclosures & Short Sales

The first step in beginning the short sale process is identifying a Short Sale Expert who will successfully market your home, find a buyer, and negotiate the short payoff with your lender or lenders. Simultaneous to this you will need to gather up all of your financial documents to include: paystubs, all asset statements, tax returns, w2′s, hardship letter, & current mortgage statements. (other items will be applicable dependent on your circumstances)

At this time we encourage you to seek both legal council and tax advice.

Once we accept an offer on your home we submit the entire package which includes all financial documents & purchase offer to all lenders involved. Patience is required as it takes 60-90 days for your lenders to review the purchase contract and your financials to determine if they will grant you a short sale.

During this time we make follow up calls with the buyer’s agent to ensure they have constant communication and don’t lose interest in your home. This is 1 of the largest issues with short sales. The buyer is forewarned that the property is a short sale and patience is necessary. However many times the buyer gets tired of waiting and makes offers on other properties. We do our best when accepting an offer to ask the right questions and determine the buyer’s true motivation. There are many instances where right when short sale approval is granted the buyer walks. Now you might think “what’s so bad about the buyer losing interest at least the bank has agreed to the short payoff amount.” The problem is that when a bank approves a short sale the buyer is part of the approval process. If the buyer changes the negotiation process must start all over again.

The lender sends out an appraiser to do what’s called a “BPO or Broker’s Price Opinion” This 3rd party appraiser indicates to the bank the true market value of the property. The bank wants to insure that the price being offered by the buyer is reasonable to market value.

The other negotiation that takes place at this time is release of lien AND liability or chance of future deficiency judgement. Often times the bank is asking for lump sums of money especially in the case of a strategic short sale. They either request a cash contribution at the closing or demand a promissory note is executed. We are often times able to negotiate around these occurrences. We also must negotiate how much money any 2nd or 3rd liens will receive. This is very tricky. It is true in a foreclosure the 2nd or 3rd lien gets NOTHING, however this argument in negotiation is a mute point.

After all items have been negotiated to your satisfaction the lender or lenders issue a written letter of approval. We are looking for language such as “lender releases it’s mortgage or deed of trust” AND “lender forgives the remaining balance” At this time we also suggest you review the approval letters with your attorney to ensure you are legally protected. The short sale approval letters are very difficult to interpret at times and are written in legal jargon.

If the short sale approval letter is satisfactory to you the buyer is notified and closing is prepared as it would on a traditional sale.

Although it is no longer necessary to have a hardship to get an Orange County short sale approved, it does help to have a material change between the day you signed for your mortgage to today that is affecting your ability to pay because of the following:

Damage to property
Business Failure
Loss of employment
Severe illness
Military service
Inheritance
Death in the family
Forced or mandatory relocation
Increase in payments or mortgage adjustment
Separation/Divorce
Too much debt
Incarceration
Monthly expenses exceed your income or you are in imminent danger of this occurring
Insolvency or insufficient assets to meet your liabilities with no money somewhere to pay down the mortgage

Small Chart

Intermediate Chart

Joy Bender knows the intricacies of the luxury real estate market of San Diego and it’s most premier neighborhoods while offering an unparalleled degree of personalized attention to her discerning clientele. She specializes in highly confidential representation of both buyers and sellers who lead a demanding lifestyle. With her extensive experience in San Diego waterfront estates and luxury properties, Joy offers her clients invaluable market knowledge, superior negotiation, and legendary customer service. Joy has helped over 1,000 clients in the past 12 years with their real estate needs.

Joy’s real estate articles have been published nationwide in over 358 newspapers, online news services, and magazines. Most notably the Wallstreet Journal Marketwatch, The Boston Globe, nationwide Business Journals, Reuters, The San Francisco Chronicle, CNBC, and The Houston Chronicle. Additionally she has been interviewed on the local FOX 5 San Diego TV station regarding the Real Estate Market.

Joy Bender holds the following designations and certifications: