3 Questions to Ask Before Considering a Short Sale

If you are thinking of pursuing a Short Sale because you’re falling behind on your mortgage payments, you might want to consider these questions before listing your house.

How Should I Price My Short Sale Property?

Ask any Short Sale brokerage and they will tell you to price your property at or near fair market value, but it’s a good idea to begin with the total debt amount owed to your lender. How frequently you reevaluate your price will depend on how far along you are in your foreclosure process and the value of the housing market at that point in time.

It’s best to compare your home to others available on the market and price a little lower. It peaks buyer interest and helps you move into the Short Sale process more quickly. Keep in mind that the bank is most interested in recovering the mortgage debt, and you might need to pay other fees associated with selling your home.

Most lenders rely on trusted Short Sale broker’s price opinions or appraisals to see what the property is worth before you set and advertise a list price.

What & How Should I Disclose About the Short Sale Property to Buyers?

My first piece of advice is to find a Short Sale broker and let them handle this for you. Trained Short Sale brokers know what information to give and how to reassure buyers in this situation. It’s always in the best interest of both parties to disclose that a property is a Short Sale. It prevents questions and misunderstanding further along the process.

You can wait to disclose the information once a buyer is ready to make an offer, but your Real Estate broker is the best person to gauge when the timing is right. Disclosing the information too soon or too early can turn buyers off the deal.

Whether you wait until there’s an offer or post it on the sign, it’s great to have a skilled Short Sale specialist to guide you through the process

How Long Will it Take to Complete My Short Sale?

Although response times vary from lender to lender, it can take from 10 to 60 days to receive an approval of a Short Sale from a lender. That’s why it’s critical that buyers and their Short Sale buyer agents understand and accept the time frame before they make an offer.

In California, buyers have the option to include a provision allowing either party to cancel a Short Sale contract within a set period if the seller cannot get approval for the deal, but the Treasury’s new legislature concerning the 10-day Short Sale approval should help reduce wait periods.

Getting a lender to approve a Short Sale is primarily a question of economic loss and gain. Providing hard numbers to show the amount of money a bank will realize on the Short Sale outweighs amount it may recoup from foreclosing on the property and selling your home as an Bank Owned Property (REO). And to further speed up the process, all interested buyers should be pre-approved for a mortgage before submitting the offer.

Once you get the process started, you want to make sure you have everything in place to make sure the sale goes as smoothly as possible.