If you lived through the last housing downturn, you remember the term "short sale." Now it's coming back into conversations with homeowners who owe more on their mortgage than their home is worth, and with buyers who wonder whether a short sale is worth the wait.
I worked on short sales from 2007 through 2014, a stretch when I learned just how many moving parts one of these transactions has. The process has changed since then, and I've been updating my training so I can guide sellers and buyers through the way it works today.
What a short sale is
A short sale happens when a homeowner sells for less than the mortgage balance, and the lender agrees in advance to accept the sale proceeds as payment on the loan. The lender has to approve the sale price and the terms. That approval is what makes a short sale different from a regular sale, and it is where most of the work, and most of the delays, happen.
What has changed
• Lenders and servicers now handle many requests through online portals and standardized document packages.
• Investor and servicer guidelines differ from one loan to the next, so the first step is always finding out who owns the loan and what they require.
• Timelines for lender review vary, so a smart plan builds in patience and constant follow-up.
What has not changed
• Starting early matters. The sooner a homeowner talks to a professional, the more options they have.
• Complete, organized paperwork keeps the file moving.
• A realistic list price and a strong, well-documented buyer offer give the lender what it needs to say yes.
• Clear communication among the seller, the buyer, both agents and the lender's negotiator is what gets a file to the closing table.
If you're a homeowner
If you're behind on payments or believe you owe more than your home is worth, you are not out of options, and you do not have to figure it out alone. A short sale is one possibility among several, and it isn't right for everyone. Before deciding, I also encourage you to talk with a real estate attorney and a tax professional about how a short sale could affect your particular situation.
If you're a buyer
Short sales can offer opportunity, but they require patience and a realistic timeline. Working with an agent who understands the lender approval process helps you set expectations and avoid surprises.
I'm always glad to talk through your situation, confidentially and without pressure. Call me at 651-248-4855 or email shannon@freshstartrealtymn.com.
This post is general information, not legal, tax or financial advice.