Short Sale Closings/Negotiations


Your Guide To Understanding
Short Sale Closings

A short sale can be an excellent opportunity for investors or homebuyers to purchase a property at a reduced price. This guide can help you learn more, including how the process works and some issues to look out for with short-sale properties.

What Is A Short Sale? 

When a homeowner lists real estate as a short sale, it means the listing price on the property is lower than the amount due on the mortgage. It is usually a sign the homeowner has experienced financial hardship and is trying to avoid foreclosure.

A short sale is a way for money lenders to recover a portion of the funds from a borrower, and this also helps the homeowner to get out of financial trouble and minimize losses. 

What Is The Process Involved With A Short Sale Closing?

Although the rules for short sales vary from state to state, the steps involved typically include:


Demonstrating Financial Hardship

In order for a short sale to proceed, the seller must demonstrate financial hardship. This involves submitting a package to their lender that includes financial statements, a letter describing the seller’s hardship, and other tax documentation.


Processing The Transaction

The bank will review all materials associated with the transaction and may have follow-up requests. It’s important to note that even if the seller accepts an offer that doesn’t mean the bank will agree to it. If the bank thinks it can make more money through foreclosure, it may reject the offer.


Accepting An Offer

When a seller accepts an offer, all documentation from the buyer and seller is submitted to the bank for review. This can take weeks or months depending on the lender.


Officially Closing The Short Sale

If the bank gives the green light for the short sale, then the final stage takes place where all parties sign the relevant paperwork, all aspects of the transaction are double-checked to make sure everyone has met their obligations, and funds are transferred securely. Then, the buyer will officially take ownership of the property.

Be Aware Of Some Possible Issues  

The bottom line with short sales is that they do come with some risks. They typically take longer than traditional real estate transactions. Short-sale homes also come with fewer legal disclosures than a typical home sale. That means you may run into some unforeseen issues with the property. Plus, there is typically more paperwork required for a short sale.

You also need to prove you’re a good lending risk for the financial institutions involved if you’re not paying cash for the home. Buyers who can demonstrate stable cash flow and put a large down payment on the home may be the best candidates for short sale homes. It is also helpful if you don’t have any contingencies.

Mattingly Ford Title

Our job is to make all real estate transactions accurate and official, and we want to
make the process as hassle-free as possible. That’s why our clients trust us for
fast, friendly, and accurate closing services at a fair price.