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Selling or Buying a Short Sale

For property owners who can no longer afford to keep mortgage payments current, there is an alternative to bankruptcy or foreclosure...and that option is called a "short sale". When lenders agree to accept a short sale, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payments, however, most will with the correct set of circumstances.

But, whether you intend to buy a short sale and or sell short, it's important to have an understanding of the process. Because first and foremost, if the Buyer wants to purchase a new home and be moved in within 30 days or less, than you can not purchase a home owned by someone who is trying to sell short since that process takes anywhere from 1 to 5 months and could be denied. So the first thing the Buyer or Buyer's Realtor should ask the listing agent or Seller, before you make arrangements to see the property, is whether or not the Seller owes more than the property is worth. If the Seller does owe more than the property is worth, then do they intend that the existing lender accept a short pay?

Now, if on the other hand, if a Buyer wants to take advantage of this market and find an excellent buy, you may want to target these short sales...and the first step for a Buyer or investor is to get their financing arranged. They need to be pre-approved, not just pre-qualified. This means, all income documents, signed application and other disclosures. So call your favorite mortgage broker and they’ll arrange to give you the documentation you will need to submit along with the Contract For Sale and Purchase.

Realtors of short sale property have some extra steps to take after listing the property for sale:

  1. Obtain the Name of existing Lender(s) and the loan/account number(s), together with any correspondence the Seller has recently received from them.
  2. Locate the telephone number for the Loss Mitigation Department (we have prepared a list of the most popular lenders - click here to view list). Contact them to obtain an application form and a list of documents they will require to consider a short pay. Most likely they will require the Seller to provide the following:
    1. Financial Statement with proof of income and assets;
    2. Two years Tax Returns;
    3. Two current pay stubs; and
    4. Two most recent Bank Statements.
  3. Obtain an authorization letter from the Sellers giving you permission to contact the Lender. (It's good idea to include Mizner Title's name as well so we can assist you with follow ups).
  4. Obtain a "hardship letter" explaining whey the Seller must sell.
  5. Prepare a Comparative Market Analysis.
  6. Take pictures of any and all defects indicative of reduced value.
  7. Contact Mizner Title to prepare a preliminary HUD-1 or net sheet.
  8. Copy the Contract For and Purchase (including a "short sale" disclosure), Listing Agreement and the proposed Buyer's pre-approval letter.

If all goes well, the Lender will approve the short sale. GOOD LUCK!


MIZNER TITLE & ESCROW, INC.
CATHARINA B. VAN KLEECK, President
MICHELLE A. LYNCH, Vice President
Mizner Park
433 Plaza Real, Suite 275
Boca Raton, FL 33432
(561) 997-8600, Fax (561) 258-0550
E-mail E-Mail - Closings@MiznerTitle.com

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