Over the past few years, the real estate market has seen a multitude of properties selling as a short sale. While many markets are finally seeing a reduction in these distressed properties, they are still around and affect the homeowner as well as the potential buyers.
Simply stated, a short sale means that the lienholder on a property accepts payment that is less than is owed… In other words, it’s “short.” The lienholder would be the lender or lenders. If home has a first and second loan, then both lenders (lien holders) would have to accept the terms.
The process is relatively simple:
- The listing agent notifies the lien holder(s) of the intention to sell as a short sale
- A buyer’s offer is accepted by the seller
- The seller completes a full short sale package and submits to the lien holder(s)
- Buyer’s offer
- Seller statements of financial distress/hardship
- Seller’s complete financial statements
- The lien holder(s) order a Broker Price Opinion (BPO) which is an approved real estate broker’s opinion of the market value of the property.
- Once approved by current lien holders, then the sale concludes as normal. (Buyer obtains loan, appraisal, inspections, etc.).