Your Destin Florida home is for sale as a “short sale“. You’re about $300,000 “upside down”. You just received an offer you feel is too low. I agree – it is a waste of time to send a contract significantly lower than market value to your short sale lender. So you counter the buyer’s offer, they accept, and you now have a contract. What happens next?
1. We send the contract with a preliminary settlement statement and all your financials to your mortgage lender.
2. Your lender orders a Broker Price Opinion or Appraisal on your property.
If the appraisal comes back much higher than the contract price, the lender will counter the offer. The buyer can accept or reject that. (Most of my short sales are approved because my pricing is pretty good, and I counsel my sellers to counter if the offer is too low. However, the BPO agent or appraiser can ALWAYS have a different opinion. All a valuation is – is OPINION. Once in a while, you get a dumb appraisal and you cannot get the offer together. You just put the house back on the market. The valuation is usually only good for 60-90 days, but sometimes 180 depending on your loan type.)
3. Your finances, hardship and loss amount are analyzed.
4. The short sale lender will then approve the sale as delegated authority for the investor or send it to the investor on your loan to approve. (Your lender is usually just the “servicer” for the investor, who reaps the benefits of your mortgage payments.)
5. In some cases, they ask the seller for a cash contribution or promissory note at 0% interest. Sometimes both. The figure is normally negotiable, but it’s best to be prepared for “something” in order to get a full waiver of deficiency.
6. The short sale is approved.
7. The buyer finalizes his loan and closes.
The short sale approval process can take 60 to 120 days to complete, and require hundreds of emails, faxes and telephone calls to ensure success . This is a quick explanation – I hope it helps!
Wendy Rulnick, Broker, Rulnick Realty