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What is the process of a short sale for the buyer. Thank you.

  • September 05 2012 - El Paso
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Answers (9)

Right on the money, Ron and Raheel.

If you are thinking about buying a home listed as a Short Sale, make sure your agent has some experience of such transactions.
  • September 08 2012
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Ron Brown is right on many points, so i'll add some too:

Practically, buying a short sale is a bit frustrating for the buyer. That's because the bank does not HAVE to accept less money than what the seller owes. And the bank can drag its feet on deciding.
 
Essentially, an offer is made to Seller, then seller goes to bank and says "hey, can i sell my house for less than what I owe you and you consider payment by buyer as paid in full? Can you just not let me off the hook here?"

Bank does its own number crunching, and by the time it's done, the buyer has gone to greener pastures, withdrawing the offer in the process.

I realise the above is a bit simplified, but hiring a knowedgable real estate lawyer can certainly ease the pain for a lot of buyers, and save time and money.

Raheel Shahzad, Attorney, CPA, Real Estate Agent
Lombard, IL
  • September 08 2012
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Gentlemen, If you are unsure of short sale procedures you are probably better off not answering these questions because it makes you look less than professional.

The bank has no authority to sign or counter an offer between you and the seller. It is still the seller's property and he is still the one that accepts and signs or counters the offer.

The bank is being asked to accept a short payoff (Thus the short sale moniker). The bank will request a BPO (Broker price opinion) and or a full appraisal of the property,  they will then look at the estimated HUD-1 statement and decide if their net is acceptable or not. If they say it is not, then the seller needs to re-negotiate the contract price to arrive at the banks net figure.

This does not take into account the financial package and hardship letter, showing the bank why the seller needs  to short sale the property or whether the seller is willing and able to contribute to the shortfall.

It amazes me the amount of misinformation that is passed on to unsuspecting consumers via these forums.
  • September 05 2012
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As the buyer in a short sale, you are indirectly dealing with a bank. The listing agent should compare offers and submit the highest but the seller won't (or at least shouldn't) counter any offer. That is up to the bank since they will be losing the money. The listing agent makes a huge difference in the transaction of a short sale. Some know the banks and the process and some don't...
  • September 05 2012
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Profile picture for craigfial
The process is make the offer and WAIT.  Short Sales are very complet transactions and require many people to perform their dutues in a timely manner which rarely happens.  Hopefully yours sellers are HAFA approved.  That will make the process go a bit easier.
  • September 05 2012
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Other than the points mentioned below, you should be aware that short sales are always "As Is". If any major defects are found during your inspections, you MAY be able to renegotiate the price but the lender will not permit the seller to spend any money on repairs etc.
  • September 05 2012
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1st you have to find the property, than you submit an offer as you would on any other property, the seller who is the current owner must sign the offer.

Once the seller signs the offer the process begins, whoever is the negotiator/attorney goes to work with the bank. The negotiator and bank can go back and forth for a couple of months, the fastest I have done was 8 weeks but they can drag on for a while. 

Hope this helps if you have more questions feel free to reach out to us at  [Website removed by Zillow moderator. Please see our Good Neighbor Policy.]

  • September 05 2012
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Although the process for purchasing a home is the same, in a short sale there is little the buyer can control and haggle.  The bank is deciding on the rules and are not quick in making decisions.  The buyer has the same rights in a normal purchase and your agent should educate you on the entire process before attempting a short sale purchase.  it is not for everyone or for those who want to close quickly.  You have find some great deals, which may require a little sweat equity on your part.  Best of luck to you.
  • September 05 2012
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The process begins like other offers you put an offer in and wait for a response. Depending on if the short sale is approved or not it can take months to get a response. If you need to move quickly and the short sale is not already approved by the bank you will need to move on. The short sale list price if approved by the bank does not allow for much variance in most cases. I hope that was helpful to you.

  • September 05 2012
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