We take a lot for granted as real estate professionals.  We think that a name implies specifically what something is...and of course that's not the case, and we should be taken to task onit whenever we use jargon a seller doesn't understand.

When I have mentioned "short sales" to people in casual conversation or in a consulting situation, I often get the question: "What's that?"

Here is the "Short" of what a short sale is. This is not meant to be a comprehensive explanation, by any means. And there can be a lot of twists and turns involved, but this will at least get the wheels turning to consider if a short sale might be an option for you or someone you know.

 
Short Definition of a Short Sale: - When the lending institution is willing to take less for a payoff of the property than what is owned.

STEPS FOR THE REALTOR AND SELLER TO ACCOMPLISHING A SHORT SALE

1. In a short sale the seller will get out from under the debt of their home, but they will not be able to walk away from the closing with any money. It is a last ditch effort to save them from foreclosure or ruined credit and they have to understand the implications. 

2. Determine if the property is a candidate for a short sale by finding out what is owed and what the bank might realistically accept

3. The Realtor and/or Homeowner can call the lending institution and find out who their short sale person is

4. The Realtor and/or Homeowner should find out what forms need to be filled out to be a candidate for short sale

5. The Realtor should help the client as best they can to  get these forms filled out. This is an easy place to get bogged down because the forms are tedious and it's not a pleasant task.

6. Once the bank approves the client for a short sale, list the home as soon as possible at a new price. It's probable the bank won't give  a dollar figure of what they are willing to accept, but if possible list the home within $10000 of what is owned on it. I recently sold a home on which $135000 was owed. I listed it for $125000. Got a bid of $127000, the bank insisted on $129000, which means they netted about $122000 after all fees were paid out.

7. Be SURE to put in your listing that the property is subject to short sale approval. (It is possible that you will get an offer and the bank will not accept it. Unfortuantely sometimes it is a bit of a guessing game until you actually have an offer to put in front of the bank.)

8. If you get an offer, the Realtor needs to call the bank contact and discuss it, don't just fax it over and expect it to be looked at

9. Be persistent. The Realtor should call daily if necessary. The homeowner can also stay involved. Staying on it is the way to make it happen.  Be nice. Present the circumstances with empathy when speaking to the bank to help them remember this is a person they are trying to help.

10. The Realtor should prepared to negotiate a bit with their compensation if necessary. We all hate to do it, but it doesn't seem quite fair that we get paid our full commission and the seller walks away with nothing. 

Cardinal rule in every step: Follow up, follow up, follow up.  If there was ever a time NOT to trust email, voice mail and faxing this is it. The Realtor needs to develop a relationship with the short sale expert at the lending institution and this is one time when having the seller involved to plead their own case might be helpful too.

COPYRIGHT 2007 - DONNA BATDORFF ASSOCIATIES, YOUR WAY REALTY 

My Listings 

(CLIP ART ROYALTY FREE, COURTESY OF FOTOSEARCH)