Recently, I had my first experience of a short sale, representing the sellers.  It’s an unfortunate situation for the homeowners, but it is what it is.  Shortly after listing the property we received a fantastic offer.  However, we could never present the offer to the bank because the seller took an entire week to get their pre-approval letter!  Thankfully we had a backup offer come in even better that the first.  I believe it was full price, or just shy of and no option period for inspections!  Sounds too good to be true? It was.  Three days after getting under contract, the buyers left the country.  Unfortunately the house went into foreclosure soon after.  Although we had the steps in order and offers on the house, it was almost out of our control. 

Since this seems to be more common, I’m glad to see so many posts on the topic with great advice.  I would like to share some advice I saw in the Jan/Fed 2009 issue of Keller Williams Outfront magazine.  Kristina Arias and Todd Barton from the Mesa/Gilbert AZ market center are the mentioned agents.  I believe these steps are form them, and wanted to give credit!

A Step-By-Step Overview of a Short Sale

Recognizing that the short-sale process varies by bank and by market, the following steps represent the basic framework for helping clients to avoid foreclosure:

1.  Pre-qualify the seller, being sure to determine: where they are with their payments, whether a foreclosure date has been set, the bank you’ll be working with, and whether there are any second liens.

2.  Conduct a comparative market analysis of the property.

3.  Get a letter of authorization from the client to negotiate with the bank on their behalf.

4.  Obtain the bank’s specific guidelines for negotiating a short sale.

5.  List the home.

6.  Adhere to a predetermined schedule for dropping the price of the home by a specific percentage until an offer is received.

7.  Present a contract to the client once an offer has been accepted.

8.  Submit the offer to the bank, along with a complete short-sale package, documenting the seller’s financial status and the buyer’s qualifications.

9.  Contact the bank within 48 to 72 hours of submitting the package to ensure that all necessary documents have been received.  Clarify the procedure and time frame moving forward.

10.  Obtain two BPOs (broker price opinions),  typically take anywhere from one to 20 days.  Generally banks are lookign for a BPO that is within 15 percent of the offer. 

11.  Continue monitoring the process once the offer is sent to the negotiator, which tends to take 30 to 45 days, and then on to management for a decision, which tends to take seven to 14 days.

12.  Allow another seven to 14 days for receipt of a demand letter from the bank.

13.  Schedule the closing, which typically takes another 30 days.