Knowledge Buyers And Sellers Need To Know About The Short Sales Process   by Lisa Udy

in Real Estate / Buying a Home    (submitted 2011-05-13)

Many buyers and sellers of homes in real estate transactions hire agents to represent them. Buyer's agents represent potential buyers' interests. Selling agents look out for sellers' interests. Though buyers and settlers are not required to use the services of real estate agents, it is highly recommended. Short sales have become an increasing important category in many recent real estate transactions. The main participants include banks, sellers, potential owners and respective agent representatives. All have important parts to play to ensure for the transaction to succeed.

Homeowners unable or unwilling to pay the required mortgage premiums may opt to sell, rather than have the home repossessed. With the approval of the homeowners' lenders potential buyers may make an offer to buy the property at discounted prices.

An appointment is normally made to see the property for sale. The potential short sale information must be fully disclosed by the selling party to the buyers' side. The potential purchase then make an offer based on the buyer's agents advise. Good agents perform a sales comparison report based on recent sales of identical properties locally.

An offer, made in writing is sent to the agent representing the owner. After presenting all offers to the seller, a decision is made to accept, reject or counter the offer. If agreement is reached between the two parties, both buyer and seller sign the offer to form a contract. The contract is then forwarded to the seller's loan provider for review and a decision. Lender approval must be gained.

Mortgage loan providers response time to short sale offers vary. Some financial institutions have made significant progress in this area. The ability to send contract information to and receive feedback from lenders in a timely manner is critical. Many potential buyers are put off by a third party's slow response.

Financial institutions have loss mitigation departments responsible for processing short sale offers. Real estate contracts received are initially handled by the documentation department. They ensure all documents received are in compliance with the institutions standards. The negotiating department assigns a negotiator to look over the documents and propose any changes. A report is complied by an appraiser to provide the negotiator with a fair market sales price. This report is mostly based on recent sales of similar types of dwellings. The final reviewer is called an underwriter. Approval is then sought from the investor who provided the sellers mortgage loan.

After approval is received from the seller's mortgage provider the buyer and seller are informed. The homeowner must make provision to vacate the premises no later than the date of settlement. The buyer must secure funds from a mortgage loan provider. A legal entity chosen by the purchaser works to ensure a smooth transition of ownership from seller to buyer. This involves getting funds released from the buyers' source of finance and sending the sale proceeds to the seller's mortgage company the day of settlement.

Short sales processes require input by all participants. Sellers and buyers must form a legally binding contract. The seller's mortgage company represented by loss mitigation professionals need to respond in a timely manner to offers. The financial institution responsible for final approval must be prepared to be reasonable. If all concerned parties play their part success is more likely.

About the Author

For more short sale information from Jasper Brinks don't forget to check out his Nibley Utah Homes website where you can search all Nibley Utah Real Estate.