Short Sale FAQ's

In this Real Estate market I get asked all kinds of questions about Short Sales. I thought this would be a good day to do a quick FAQ list about Short Sales. If you have a question I have not answered here, please let me know and I will answer it for you if I possibly can!

Questions Buyers Ask:

1. ARE SHORT SALES REALLY A BETTER DEAL? They can be. However, I would not count on that. See, when you first offer on a short sale the Seller has to agree to your offer to submit it to the bank, right? But there will be a Short Sale Addendum attached to the contract that says the Seller has no actual control over the terms of the contract. EVERYTHING in the contract becomes subject to what the lender will agree to. So some lenders might agree to a great deal on certain loans, but they also may not.
2. HOW LONG WILL IT TAKE TO GET APPROVAL? Well that depends. In some cases it takes only 3-4 months to get approval for a short-sale. I have one file going on a year. The honest-to-goodness answer is "We'll know when we have approval". I can tell you there are some key factors that can make the process take longer:
1. How many mortgages are there? Ideally there is only one, two means two banks and two negotiations and so on.
2. Who is the bank?
3. Who is negotiating with the bank? Is it the Seller, the Realtor, an Attorney or a third party negotiator?

Questions Sellers Ask:

1. CAN YOU PROMISE ME I WON'T HAVE TO PAY ANYTHING? The short answer to this is "No". As I mentioned in #1 Above, the terms are 100% subject to bank approval. I have no actual control over what the bank will approve. We can negotiate on your behalf, but we can't make any promises about what the bank will or will not do. We can tell you that if the bank's terms are not something you are able to comply with, you do not have to proceed with the sale.
2. HOW LONG WILL IT TAKE? - Same answer as #2 above, with the added caveat that the bank will ask for updated information periodically, and the quicker you get it to us, the quicker we can get it to them.
3. CAN THEY COME AFTER ME FOR THE DEFICIENCY? This is a case-specific question but again the short answer is this. If the Short Sale approval letter states that they are waiving deficiency rights then No, they can not. If they letter does not say, then they might but they also might not. If it is an investment property they almost always will at a minimum send you a 1099 at the end of the year. Your accountant can advise you with regard to how that affects your taxes.

These are some of the most common questions we are asked about short sales. Of course each case is unique based on the individual situation of the sellers. I am happy to answer any additional questions via email or comments.