Short Sale Steps and Myths

As mentioned yesterday, Short Sales can be a daunting task. Once a Short Sale is Approved sometimes sellers believe that everything is done. So here are some common Short Sale Myths that sellers can fall into. Clients believe once a contract has been submitted the Short Sale is a done deal, Fact is once the contract is submitted the lender begins working on the approval process and must get approval from several parties before it can be agreed upon. Existing borrowers believe they are no longer responsible for the debt and should stop making payments. Fact, until the property actually closes the borrower is responsible, if they stop making payments more fees are incurred and that can cause the contract to be denied as the expenses are increased. Borrower thinks the remainder of the debt is forgiven. Fact the lender may require the borrower to contribute at the closing or sign a promissory note for any remaining balance. Be sure you know the answers to all of these before you think the deal is done. Keep in mind the investor of the loan itself determines reasonable market value and has to approve the offer. The actual lender the majority of the time is not why the Short Sale process takes so long, the other parties involved such as secondary lenders can extend the time-frame while negotiating what amount of money they will accept and receive. Next post on Short Sales will be why do they take so long. Any questions? Just let me know. Thanks again and I hope this helps.