Phone: (952) 898-7082 
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What is a “Short Sale”?
WHAT IS A SHORT SALE? A “Short Sale” (Also referred to as: “Negotiated Settlement”, “Short Pay” or “Pre-Foreclosure”) occurs when a Lender agrees to accept less than the amount owed on the original note or total payoff, as an alternative to foreclosure. If the property is worth less than the amount owed on the loan, then even if the Lender forecloses and takes back the property, they know they are going to take a loss. We can often convince a Lender that they will “do better” if they take less than what is owed now rather than taking the property back by foreclosure and trying to re-sell it.
HOW LONG WILL IT TAKE? The Short Sale negotiation process can be rather lengthy. It may take several weeks to several months for an approval. Many Lenders will have several layers of bureaucracy, insurers, and investors that we will have to maneuver through in order to get a Short Sale approved. So, it is important to be patient during this long process.
BUT MY HOUSE IS GOING TO FORECLOSURE, WILL I HAVE ENOUGH TIME? Maybe – maybe not. Just starting a Short Sales will NOT automatically stop a foreclosure. However, many times we can convince a Lender to stop the foreclosure to let us attempt to negotiate the Short Sale. While there are no guarantees, it is worth the attempt.
CAN I STAY IN THE HOUSE? The key word in a “Short Sale” is sale. The purpose of a Short Sale is to get the property sold. This is not a program that can stop a foreclosure and allow you to keep the house indefinitely. Moreover, it will be easier to sell the house if it is vacant. Therefore, you should most certainly begin making plans to vacate the property.
HOW DO I KNOW THIS WILL WORK? Again, there are no guarantees. We cannot, have not, and will not make promises to you that this will work. Once you miss a payment, the Lender is in charge and can proceed to foreclosure if they want to. But we know they do not want to and we are very good at presenting alternatives to the Lender tht they often want to accept, as opposed to moving forward with a foreclosure. We are very proficient at what we do, but NO GUARANTEES are being made as to whether or not the Lender will accept the Short Sale.
WILL I GET ANY MONEY FROM THE SALE? No. A universal requirement of Lenders in granting a Short Sale is that the borrower will not get any proceeds from the sale of the property. Being, the Lender is going to take a loss on your loan, they are most certainly not going to allow you to profit from the situation.
WHAT HAPPENS IF THIS DOESN’T WORK? Your house will likely go to foreclosure. A Short Sale is something we try after you have exhausted your other options.
WHAT IS A “RELEASE”? A Lender may offer a “release”, which is a security instrument against the property in exchange for less than the total amount of the note. A release will allow the property to be sold without paying off the obligations of the note. However, the note is not satisfied. Advantages: This successful Short Sale will allow the property to be sold and thus avoid foreclosure. Disadvantages: The remaining debt on the property (sometimes called a “deficiency”) still exists. In other words, you are still liable for the note and still owe the money to the Lender. Reality: It is not likely the Lender will purse the deficiency unless you have other significant assets. However, if you chose not to try the Short Sale before going to foreclosure, and then you end up going to foreclosure, it will result in you having a deficiency anyhow.
WHAT IS A SATISFACTION? A Lender may agree to accept less than they are owed as complete and total satisfaction of the note and release its lien against the property. Advantages: Your note and obligation to the Lender are satisfied for less than you owed. When the property is sold, the debt is paid off completely. Disadvantages: You may have some tax consequences that you should discuss with your tax advisor due to the fact the Lender is making money you owe them disappear. Sometimes our negotiations are successful in obtaining a satisfaction. Although, there are other times where the Lender will only negotiate a release.
HOW CAN I HELP? The Lender will require a review of a financial package that usually includes: (2) month’s bank statements, (2) months paycheck stubs, (2) year’s tax return, Financial Worksheet and other information. The leading cause of delay and even denial of our offer to the Lender is caused by the Seller failing to cooperate and/or deliver the necessary items in a timely fashion. To help us succeed, please find as much of this information as you can right now and complete the “Financial Worksheet”. These things will help us work faster and increase your odds of a successful Short Sale.
Lynn Stowell Housing Hardship Resource 612-306-2211
952.898.7082
Email Us: NorwoodGroup@EdinaRealty.com
MARKETING YOUR HOME: Your home will be shown to both investors and traditional buyers. During this process, your home may be shown several times a day in some cases. The goal is to get the highest and best offer in the shortest time possible. Those viewing or calling to view your home have been instructed not to bother you with questions regarding the short sale so as to not put any additional stress on you.
THE FIRST OFFER: Once an offer is received on your property, I will schedule an appointment for you to come in and sign the Purchase Agreement (this should only take 5 minutes). Although, you do need to sign one offer, your property can attract multiple offers. All offers will be submitted to the Lender(s) for their review and you will not need to sign each and every offer that we receive. Towards the end of the process, when the Lender accepts an offer, you will need to sign that offer in order for us to open escrow.
THE PROCESS: Once we have sent the offer(s) to the Lender(s), the actual Short Sale process can take anywhere from 4 weeks to 4 months. This timeline varies with each Lender. To keep you informed, I will send out weekly emails to sellers, agents and buyers to keep all informed. Please realize there will be many times where the message may state “no news”. Also you may call me at 612-306-2211. Know that I will return all calls within 24 hrs to give you an update.
After the Lender review the Short Sale package, a BPO (Broker Price Opinion) will be ordered by the Lender. This is similar to an appraisal and once the Lender receives their report, they will usually make a final decision shortly thereafter.
The Lender orders the BPO so they can figure out what their net proceeds will be (how much of a loss they will be writing off). Your property will remain “Active” on the MLS until the Lender accepts the offer. Please be patient throughout this process. At times you may feel things are going too slow, but remember this is not a regular transaction and can take longer to complete.
THE ACCEPTED OFFER: Once an offer has been approved by the Lender, I will notify you that we are going to proceed to close the transaction.
The Lender may demand to close anywhere from 10-30 days, so be prepared. If the buyer does not close by the Lender’s deadline, the next highest bidder in line may be accepted. **If the buyer(s) cannot perform and close on time, the Lender may decide to proceed with foreclosure thus severing the opportunity for all parties involved to complete a successful transaction.**
THE CLOSE: You, as the seller, will be instructed to sign seller documents at the closing office. Please bring with you your I.D., all keys, garage door openers, and a good attitude. We will celebrate your new freedom from this financial burden and stress.
YOUR FINANCIAL FREEDOM: Keep all of your copies of the documents pertaining to this sale in a safe place. Call me with your new forwarding address so I can keep in touch with you through the year and offer you assistance in preparing yourself for future success. Try not to incur any new debt and try to keep low balances on any credit cards you may have. Maintain good consumer credit by not paying late on your currently active accounts. Pay your rent by check or some other way that can be tracked to show evidence that you are paying on time. This will help you should you choose to purchase a new property in the future.
Lynn Stowell Housing Hardship Resource 612-306-2211
952.898.7082
Email Us: NorwoodGroup@EdinaRealty.com
HOW LONG WILL IT TAKE? The Short Sale negotiation process can be rather lengthy. It may take several weeks to several months for an approval. Many Lenders will have several layers of bureaucracy, insurers, and investors that we will have to maneuver through in order to get a Short Sale approved. So, it is important to be patient during this long process.
BUT MY HOUSE IS GOING TO FORECLOSURE, WILL I HAVE ENOUGH TIME? Maybe – maybe not. Just starting a Short Sales will NOT automatically stop a foreclosure. However, many times we can convince a Lender to stop the foreclosure to let us attempt to negotiate the Short Sale. While there are no guarantees, it is worth the attempt.
CAN I STAY IN THE HOUSE? The key word in a “Short Sale” is sale. The purpose of a Short Sale is to get the property sold. This is not a program that can stop a foreclosure and allow you to keep the house indefinitely. Moreover, it will be easier to sell the house if it is vacant. Therefore, you should most certainly begin making plans to vacate the property.
HOW DO I KNOW THIS WILL WORK? Again, there are no guarantees. We cannot, have not, and will not make promises to you that this will work. Once you miss a payment, the Lender is in charge and can proceed to foreclosure if they want to. But we know they do not want to and we are very good at presenting alternatives to the Lender tht they often want to accept, as opposed to moving forward with a foreclosure. We are very proficient at what we do, but NO GUARANTEES are being made as to whether or not the Lender will accept the Short Sale.
WILL I GET ANY MONEY FROM THE SALE? No. A universal requirement of Lenders in granting a Short Sale is that the borrower will not get any proceeds from the sale of the property. Being, the Lender is going to take a loss on your loan, they are most certainly not going to allow you to profit from the situation.
WHAT HAPPENS IF THIS DOESN’T WORK? Your house will likely go to foreclosure. A Short Sale is something we try after you have exhausted your other options.
WHAT IS A “RELEASE”? A Lender may offer a “release”, which is a security instrument against the property in exchange for less than the total amount of the note. A release will allow the property to be sold without paying off the obligations of the note. However, the note is not satisfied. Advantages: This successful Short Sale will allow the property to be sold and thus avoid foreclosure. Disadvantages: The remaining debt on the property (sometimes called a “deficiency”) still exists. In other words, you are still liable for the note and still owe the money to the Lender. Reality: It is not likely the Lender will purse the deficiency unless you have other significant assets. However, if you chose not to try the Short Sale before going to foreclosure, and then you end up going to foreclosure, it will result in you having a deficiency anyhow.
WHAT IS A SATISFACTION? A Lender may agree to accept less than they are owed as complete and total satisfaction of the note and release its lien against the property. Advantages: Your note and obligation to the Lender are satisfied for less than you owed. When the property is sold, the debt is paid off completely. Disadvantages: You may have some tax consequences that you should discuss with your tax advisor due to the fact the Lender is making money you owe them disappear. Sometimes our negotiations are successful in obtaining a satisfaction. Although, there are other times where the Lender will only negotiate a release.
HOW CAN I HELP? The Lender will require a review of a financial package that usually includes: (2) month’s bank statements, (2) months paycheck stubs, (2) year’s tax return, Financial Worksheet and other information. The leading cause of delay and even denial of our offer to the Lender is caused by the Seller failing to cooperate and/or deliver the necessary items in a timely fashion. To help us succeed, please find as much of this information as you can right now and complete the “Financial Worksheet”. These things will help us work faster and increase your odds of a successful Short Sale.
Lynn Stowell Housing Hardship Resource 612-306-2211
952.898.7082
Email Us: NorwoodGroup@EdinaRealty.com
Expectations and Timeline
MARKETING YOUR HOME: Your home will be shown to both investors and traditional buyers. During this process, your home may be shown several times a day in some cases. The goal is to get the highest and best offer in the shortest time possible. Those viewing or calling to view your home have been instructed not to bother you with questions regarding the short sale so as to not put any additional stress on you.
THE FIRST OFFER: Once an offer is received on your property, I will schedule an appointment for you to come in and sign the Purchase Agreement (this should only take 5 minutes). Although, you do need to sign one offer, your property can attract multiple offers. All offers will be submitted to the Lender(s) for their review and you will not need to sign each and every offer that we receive. Towards the end of the process, when the Lender accepts an offer, you will need to sign that offer in order for us to open escrow.
THE PROCESS: Once we have sent the offer(s) to the Lender(s), the actual Short Sale process can take anywhere from 4 weeks to 4 months. This timeline varies with each Lender. To keep you informed, I will send out weekly emails to sellers, agents and buyers to keep all informed. Please realize there will be many times where the message may state “no news”. Also you may call me at 612-306-2211. Know that I will return all calls within 24 hrs to give you an update.
After the Lender review the Short Sale package, a BPO (Broker Price Opinion) will be ordered by the Lender. This is similar to an appraisal and once the Lender receives their report, they will usually make a final decision shortly thereafter.
The Lender orders the BPO so they can figure out what their net proceeds will be (how much of a loss they will be writing off). Your property will remain “Active” on the MLS until the Lender accepts the offer. Please be patient throughout this process. At times you may feel things are going too slow, but remember this is not a regular transaction and can take longer to complete.
THE ACCEPTED OFFER: Once an offer has been approved by the Lender, I will notify you that we are going to proceed to close the transaction.
The Lender may demand to close anywhere from 10-30 days, so be prepared. If the buyer does not close by the Lender’s deadline, the next highest bidder in line may be accepted. **If the buyer(s) cannot perform and close on time, the Lender may decide to proceed with foreclosure thus severing the opportunity for all parties involved to complete a successful transaction.**
THE CLOSE: You, as the seller, will be instructed to sign seller documents at the closing office. Please bring with you your I.D., all keys, garage door openers, and a good attitude. We will celebrate your new freedom from this financial burden and stress.
YOUR FINANCIAL FREEDOM: Keep all of your copies of the documents pertaining to this sale in a safe place. Call me with your new forwarding address so I can keep in touch with you through the year and offer you assistance in preparing yourself for future success. Try not to incur any new debt and try to keep low balances on any credit cards you may have. Maintain good consumer credit by not paying late on your currently active accounts. Pay your rent by check or some other way that can be tracked to show evidence that you are paying on time. This will help you should you choose to purchase a new property in the future.
Lynn Stowell Housing Hardship Resource 612-306-2211
952.898.7082
Email Us: NorwoodGroup@EdinaRealty.com
