Selling a house via a short sale process is much more common now in this market than ever before. Prior to the recession of 2008, most homeowners listed their houses for sale in any given neighborhood, had buyers scheduling appointments to view their houses, and then the buyers made offers comparable to the list prices where the sellers received the price that was listed if not more due to multiple offers on the same house. That is considered a normal real estate market that America is accustomed to dealing with. However, with the bankruptcies of major firms resulting in massive layoffs and closing of doors, our market has seen a mortgage meltdown where credit is hard for banks and companies to extend to consumers making real estate transactions grind to a screeching halt for most buyers buying with credit. The result of the slow real estate market has translated to increased foreclosures where homeowners who either lost their jobs or no longer make the same salary could no longer make their payments.

In order to avoid foreclosures, banks have now been accepting short sales more than ever. A short sale is an amount that a bank will take on the sale of the house less than it is currently owed by the seller. An example is this: the seller of a home owes the bank $100,000 before it is paid in full. However, houses in the neighborhood have only been selling around $93,000 or less due to the neighborhood experiencing many foreclosed houses selling for substantially less than they are worth just so the banks get them sold and off their books. Lower selling houses in the same vicinity cause all other homes in the area to have to sell low in order to move them. If that seller owes $100,000, but houses are averaging $93,000 or less, then the seller will owe the bank $7,000 if the house is marketed to be sold at $93,000. Hence, the $7,000 is what the seller is “short” to pay the bank in full. Banks rather have 75 to 80% of the loan rather than lose the whole loan and allow the property to foreclose and sell for much less.

Pricing a short sale listing is easier than you think. It just takes strategy, knowledge of the comparable market near the property, and persistence, and you are on your way to selling your short sale. First, you want to start off listing your house around the mid range of all the comparables and current listing so that it is not too high nor too low. Next, you begin dropping the price weekly or every other week by 3% until you get an offer submitted.

Once you have the contract, you now want to ensure that you write the loan number on EVERY page that is faxed to the lender. Keep detailed notes with the dates and times of all conversations and faxes made. It is also wise to send in the 3^rd party authorization form with each fax to avoid the company stating that they do not have it.

The BPO appraisal will then be ordered. This can take a few weeks to get done so you want to always submit your contract…any contract received on the home ASAP so that the bank can begin the time-consuming process of ordering the BPO which will keep you ahead of the game in time.

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