What is a Short Sale (short pay)?
When your lender agrees to accept less than what you owe to discharge your mortgage and allow you to sell your property. In the past the seller usually had to bring money to the closing table if there was a small difference between the sale price and what was owed on the mortgage. The sharp decline in values and huge number of non-conventional mortgage loans has created a problem that many sellers can not get out of without help.
The objective
The objective will vary depending on who is involved. If you ask your mortgage company they will have a standard reply “current amount due is $$$ or to pay the entire balance is $$$$” If you ask a buyer, his objective is first to steal your property, but might concede to getting the best deal on the market. It is the lender you should be most concerned with. The lender is not obligated to do a short sale on your property. We have to convince the lender that we tried to get them all their money, but if we could not, that we attracted the best available market offer.
Your objective when entering in to a potential short sale is: “TO GET THE LENDER ALL OF THEIR MONEY”. That is what you committed and are obligated to do. If the market will not produce an offer sufficient to cover the entire mortgage, this objective might change (with your lenders approval).
List and market the property
In an effort to accomplish your objective you must attempt to sell the property and recover all of the mortgage money. The lenders will require you to list the property on the MLS with a REALTOR. This is the most widely accepted way to attract buyers and determine market rate. The listing agreement will seem to have a very high list price usually what you owe plus about $10,000. for closing costs. You will need to prepare the hardship package and get it to our Negotiators.
The Benavente & Kornitzer Negotiator
When you have completed the hardship package and we have put your property on the market, our negotiators will take over. There will be a quiet period of inactivity, usually 4-6 weeks while we get a short sale file opened and begin negotiations. During that time we do not expect showings, tire kickers and certainly not buyers because the property will likely be listed too high. The Negotiator will submit an offer on your property from one of our investors. This is required by the lender to begin a short sale negotiation. The lender will try and assign value to your property through an appraisal or Brokers Price Opinion (BPO). We will combat the assigned value by providing comparable sales of our own, pointing out deficiencies in the property and with an overall declining market study. Our Negotiators will work directly with your lender to arrive at the lowest possible sale price for your property. Once the price is negotiated, it is time to drop the price and attract some buyers.
Property pricing
Our objective is to preemptively begin lowering the property price so that it apexes at the right time and in accordance with what the lender is trying to get. At that point the property will be one of the best values on the market. Calls, showings and offers should dramatically increase.
Approval terms
When we have an offer that is in range of what the lender is looking for, we will submit it. The approval process can take a few days up to a month in some cases. Once approved the lender will issue an “approval letter” which will identify the terms of the agreement. This letter will be used by the title company to consummate the transaction and discharge the mortgage(s) on your property. Closings can be done in person or mailed away to you to be signed in front of a Notary.
