FAQ's

General Questions
What is a short sale?
How long does a short sale take?
Why should I use a short sale processing company?

Brokers and Agents
Do I need to have a buyer for my property for a lender to negotiate a short sale?
In what states do you process short sales? How can I increase my chances of a successful short sale?
What fees do you charge?
What commissions are lenders paying agents on short sale transactions?
Do you require the use of a specific escrow company?
Do I have to miss a payment to do a short sale?
How can I do a short sale without hurting my credit?
How does a short sale affect my credit as compared to a foreclosure?

General Questions

What is a short sale?
From Wikipedia: "A short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation. A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, the advantages include avoidance of having a foreclosure on their credit history and the partial control of the monetary deficiency. Additionally, a short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount."

How long does a short sale take?
A short sale takes anywhere from 30 days to several months. There are several factors that determine the length of a short sale.

Why use a short sale processing company?
A short sale processing company helps Brokers and Agents offload the tedious task of negotiating short sales with lenders. Short Sale processing companies have experts with years of experience in short sales that help to navigate some of the complicated issues that often come up in a short sale transaction. Most short sale processing companies handle the negotiation of the short sale with the lender, help with the collection and preparation of the short sale package, assist in delaying a sale date on a property, and provide the real estate professional with expertise in pricing, listing, and selling a short sale.

Brokers and Agents

Do I need to have a Buyer for my property for a lender to negotiate a short sale?
Yes. Again, it is possible to open a file with a lender and let them know you are attempting a short sale, but until a Buyer comes in with a price the lender has no idea if the short sale is a better alternative to a foreclosure. Typically a lender will not review a short sale unless a complete package has been submitted to them. A Buyers Purchase Contract is seen as part of the complete package.

In what states do you process short sales?
Currently we only offer our Short Sale services to California.

How can I increase my chances of a successful short sale?
Cash buyers are best -- Lenders are tightening lending standards and we are seeing even qualified buyers refused loans at the moment.
Get multiple offers -- Again, losing a buyer is the most typical failure point for a short sale due to their processing time and changing market conditions. We have found keeping the listing price slightly lower than market and receiving multiple offers is the best way to ensure you have a buyer when the lender agrees to the short sale. Once the lender agrees to the short sale, you can extend an opportunity to all your low bidders to up their offer on the property. The lender will appreciate this and you will get a higher commission.
Avoid Bankruptcy -- If there is any indication that your seller will be moving forward with a bankruptcy, it is best to walk away or revisit the deal later. Lenders will put the short sale on hold until the bankruptcy is completed. This can delay a deal for months.
No Sale Date -- If there is already a sale date on the property before you list the property, it will make it very difficult to get the sale date pushed out before it goes to auction considering you must have a Buyer, a completed short sale package, and a negotiator at the bank evaluate the offer before you can even start to get the sale date pushed out. We have been able to take on deals with less than 2 weeks to the sale date and have them pushed out, but that was with an offer and complete package in hand.
Price to sell – Lenders are typically not willing to approve a sales price below current area Market values. It’s always a good idea to study the market prior to making a final decision on a listing price. Remember when looking at area comparables lenders do not like to see values being determined by R.E.O’s and other Short Sales that have recently closed.

What fees do you charge?
Click here to view our pricing options.

What commissions are lenders paying agents on short sale transactions?
The commission a bank is willing to allow in a short sale depends on various factors. Every file is different from the next. It would be typical to expect a range between 4%-6%.

Do you require the use of a specific escrow company?
No, we do not require the use of a specific escrow company. We do have a preferred escrow company that we work with on a regular basis, mostly because all of their Escrow Officers have been to our Training Seminars and are familiar with the Short Sale Process.

Do I have to miss a payment to do a short sale?
Yes and No. We do not ever recommend missing payments, but lenders often times will ignore a customer who is current on their payments. A short sale is not a desirable solution for a lender as it means they are losing money, but it is generally a better alternative for them if it means they net more in the short sale than in a foreclosure. Without the threat of a foreclosure, lenders do not have much incentive to push a short sale through.

How can I do a short sale without hurting my credit?
We get this question frequently. It is almost impossible to conduct a short sale without hurting your credit. Since a hardship situation is a requirement for a short sale, it is assumed you will miss a payment just to get a short sale started. Missing a payment will definitely hurt your credit. A better question to ask is how can I do a short sale and minimize the affect on my credit. We certainly suggest you first speak with a credit counselor or lawyer before missing payments, but one option we have found that lenders are more accepting of is, as part of the short sale process the homeowner is willing to take on an unsecured note for the difference of the loan value and the short sale, sales price. Some lenders will show on your credit paid in full if you cover the difference. This is not possible for many distressed homeowners, but by minimizing the lenders losses they are more likely to keep your credit clean.

How does a short sale affect my credit as compared to a foreclosure?
This is an excellent question for a lawyer or credit counselor. We have done considerable research on how both affect a homeowner's credit and in both situations you will take a hit. In general we have found that a short sale is not nearly as bad as a foreclosure, but it does not mean that in the future creditors will be any more lenient on those who went through a short sale versus those who went through a foreclosure. A short sale often times comes through as a 'settled debt' on your credit report, whereas a foreclosure is more than likely to report to your account as “Derogatory”