What is a short sale
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Short Sale REALTOR®

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What is a short sale?

How do I qualify?

How does the Short Sale Process work?

A short sale is an alternative to foreclosure that occurs when a Mortgage company allows a homeowner to sell their property for less than what is owed. In most cases the Mortgage company will forgive the remaining debt. Lenders would much rather accept a short sale than foreclose on the property and incur the costs associated with foreclosure. Foreclosure is a time consuming and costly legal process that most institutions would rather avoid.

 

A short sale may be an option if:

    • You cannot refinance or modify your mortgage
    • You are facing a financial hardship
    • You are delinquent on your mortgage payments
    • You owe more on your home than you can sell for
    • You can no longer afford your home and are ready or have to leave.

 

The Short Sale Process can best be compared to the process that you went through to purchase the home and obtain your mortgage, except this time you are providing documents to prove that you can no longer afford the house and the best course of action is to sell.

 

The process can be broken down into 5 simple steps.


Step 1- Prequalification
Step 2- Listing and Marketing
Step 3- Valuation
Step 4- Negotiations
Step 5- Closing

 

Step 1- Prequalification

Our team will analyze your situation with our thorough prequalification process. Through this process we can establish proper expectations and make sure that we are aware of any obstacles that may exist such as liens or judgments that will need to be negotiated in order to sell the property. Also, this prequalification will uncover other options that you may want to explore before making the commitment to short sale your property. Additionally there may be short sale incentive programs available to you that are offered by certain mortgage companies and the the federal government that we can request your lender attempt to qualify you for.

 

Step 2- Listing and Marketing

During this stage we are focused on marketing the property and finding a buyer willing to pay Fair Market Value. When a potential buyer is identified our team ensures that the contract and terms are structured in a way that will give the best chance of success when presented to your lender.

 

Step 3- Valuation

During this stage your lender will perform their own valuation through a third party vendor. The value is performed by an appraiser or Broker Price Opinion Agent (BPO). This is an important part of the process and is one of the main reasons short sales get derailed. If the value that is sent you the lender exceeds what the market is willing to bear there is a chance that the short sale gets declined. There are strategies that can be implemented in order to avoid whats called a "bad valuation".

 

Step 4- Negotiations

Two things are being negotiated during this step. The first is the contract with the buyer which includes terms of the sale, price, and closing help. The other item being negotiated is the terms for which the bank will let you out from under the mortgage. This can include waiving of deficiency, cash contributions to the loss, and in some cases how much relocation assistance you will receive at closing.

 

Step 5- Closing

This is the home stretch. Once short sale approvals are received and reviewed for accuracy the buyer finalized their loan application process and all parties proceed to settlement.