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Short Sale FAQ Part II The short sale process
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Short Sale FAQ – Part II – The Short Sale process
How a Short Sale works and is a Short Sale the right way for you to avoid foreclosure?


This FAQ on the short sale process deals with how a short sale works and the steps a homeowner must go through to complete a short sale. If you need to understand the basics and the simple definition of a short sale before reading about more complex issues please start with the article on what is a short sale. To fully understand the short sale process we strongly suggest you read part I of this series about mortgage deficiency and short sale if you have not already.

A short sale represents one of the many options to stop foreclosure. If you still wish to keep your house you may want to explore ways of avoiding mortgage foreclosure which will result in you retaining ownership of the home. For more aid on ways to keep the property read the information on our Stop Foreclosure Help page. For people who no longer want to keep the home and have many other debt problems proceeding directly to bankruptcy filing may be less of a headache. The Bankruptcy Information page offers FAQs and articles about both chapter 7 and chapter 13 which proves a powerful tool for some homeowners to keep their property.


Q. Lets get to the short sale process itself, who brings up the concept of a short sale first, the homeowner or the bank?

A. Either. Where a homeowner knows they no longer what the house they might be more apt to start the discussions. In cases where the parties attempted a modification or other plan where the homeowner keeps the house but the bank feels no hope exists for an outcome where they stay in the home the bank might first suggest a short sale.


Q. Who picks the short sale real estate agent?

A. If you already have one the bank might just let them keep the listing. If you don’t care and never listed the house before they might have a local agent to suggest.


Q. Do I need a real estate agent for a short sale?

A. In most cases yes, the bank wants to make sure the house gets full exposure so most times that means a real estate agent and an MLS listing.


Q. If I already have an offer in my hand would the bank take it?

A. If you hold a legitimate offer the bank will surely review it, but as with any offer they reserve the right to reject it if they feel a better offer might come in the future.


Q. Who sets the price on a short sale listing?

A. In the end it becomes the bank’s choice. In instances where a home had already been on the market prior to short sale negotiations they might leave the listing price as it was or they might ask you to lower it.



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Q. Who signs the contracts for the realtor?

A. You need to sign everything as the property owner even if the property ends up as a short sale.


Q. Do I get a say in where to list the house for a short sale?

A. The opinion of the homeowner might be welcome, and in cases where you face a deficiency and the price might really matter to you what you say might even mean a bit more, but at the end of the day the listing price gets set by the bank.


Q. What if I think their price makes no sense at all and I strenuously object to it?

A. Since you sign the contracts you get veto power in a way, but the bank maintains the power to say if you don’t like their listing price the short sale deal is over.


Q. Who decides if an offer gets accepted?

A. It works just like the listing. The bank really keeps the final word, but you might end up with some input.


Q. What about all of the other costs associated with a standard real estate closing in a short sale?

A. Your short sale negotiation professional should try to be sure the banks or the sale proceeds cover everything.


Q. Can a friend or relative make an offer on my house?

A. Most times yes, but it may be looked at with more scrutiny.


Q. If a friend or relative buys my house as a short sale could they rent it back to me and let me live there?

A. If you’re lucky enough that someone would do that for you no one will object to that.


Q. Could the person who bought the home through a short sale proceed to sell it back to me at a price far below what I owed on the mortgage?

A. This option becomes stickier, first you need to watch out because in limited circumstances the debt you owed, including liens and junior mortgages, might come back to haunt you. From the bank’s point of view some will look upon this concept with great distain. A short sale works in a way because both sides end up with a bad situation, but it remains a better option than other alternatives. If you get the home right back as a part of the short sale the bank took a beating and you got away without paying your mortgage and kept your property, they could feel it’s not fair to them.


Q. Is this concept against the law?

A. No, but it flies in the face of what the bank wants to see. Remember too, if you get involved with any buyer who may not represent a true independent third party and you lie or misrepresent facts about the short sale purchaser to the bank even something that may not constitute a crime by itself may become fraud because of your false statements.


Q. What happens when the bank feels the short sale failed because the home did not sell?

A. In the short run they may decide to lower the listing price and try again.


Q. What happens to my credit score if we complete the short sale?

A. The short sale appears as a black mark on your credit report, not as bad as a bankruptcy or foreclosure, but certainly as a negative credit event. Once you finished dealing with the short sale and any other issues, like credit card debt settlement, you should strat work on improving your credit report and rebuilding credit.


Q. When they abandon all hope for a short what becomes the next step?

A. Once you tried a short sale for a minimum of 60 to 90 days you or the bank can start a discussion about a deed in lieu of foreclosure where you just hand over your keys and walk away from the home. If it's already too late for a deed in lieu of foreclosure you must look at allowing the foreclosure vs. bankruptcy.




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Link to the definition of a short sale. Learn what a short sale is and how a short sale helps a homeowner to avoid a foreclosure. Proceed to FAQs on understanding mortgage deficiency and the short sale process. See other options to stop foreclosure and short sale negotiation professionals. Link to understanding mortgage deficiency. To fully understand short sale one must first grasp mortgage deficiency. This FAQ answers homeowner's questions about mortgage deficiency in a foreclosure situation and continues to an FAQ on the short sale process and finding short sale help. Link to the sort sale process. Short sale FAQ with information on the short sale process to stop foreclosure from the concept of a short sale to finding a realtor, negotiating with the bank and leaving after the short sale closing. See if short sale fits to avoid your foreclosure.

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