Arleen Sealy-Hannibal
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Arleen Sealy-Hannibal
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Real Estate Glossary

Is it time to short sell your home?

Don't know what a short sale is? A short sale is when the amount of the outstanding loans is greater than the amount for which the home could sell. This can be attributed to many causes, but often is a result of a rapidly declining real estate market.

For many homeowners, a short sale is preferential to foreclosure or bankruptcy when they can negotiate with the lender to write off the remainder of the loan.

What's involved in a short sale?

First, assess the true market value of your house. An experienced REALTOR®, like Maximum One Greater Atlanta Realtors®, will be able to give you a reasonable idea of what your house will probably sell for based on a market analysis. Be careful of websites where a computer estimates your home's market value since they may not have complete information or know important things like neighborhood trends and current listings.

Next, be sure to figure in your closing costs. My experience has taught me to account for fees such as title report, appraisal, escrow, property taxes, and agent commissions to tally your final costs at the closing table.

Finally, contact your lender and notify them of your situation. They may even have a dedicated team that manages short sales. Ask about their exact process. Some lenders will be more able to work with you than others. They may be able to reduce the amount owed or make other arrangements. Your lender will have to give consent for the final sale.

When you're ready to get started, contact me through my website via email or 678-350-8522.  I will be happy to address any questions you may have about real estate short sales.



What Is A Short Sale?

A short sale is when the seller’s lender agrees to accept a payoff that is less than the balance owed on the loan.

Who Qualifies For A Short Sale?

Seller’s who have a hardship and owe more on their mortgage than what the house is worth.

Examples of Hardship:

  • Mortgage Payment Increase or Mortgage Adjustment
  • Loss of Job
  • Death of A Spouse
  • Death of A Family Member
  • Divorce
  • Relocation
  • Reduced Income
  • Medical Emergency


The Short Sale Process:

  •  Hire a REALTOR® that has experience selling short sales.
  • Sign an exclusive listing agreement with REALTOR® to market your home
  • Seller to order a payoff statement from lender(s) immediately and supply to agent.
  • Obtain a short sale package from lender(s) if applicable.
  • Not all banks have short sale packages but rather just a list of documents they are going to require to complete the process.
  • Fill out third party authorization form that allows your agent to speak directly with the lender(s) on your behalf.
  • Start working on financial statement - some lender’s prefer that you use their forms
  • Sign short sale disclosure forms
  • Sign hold harmless agreement
  • Gather the following documents and place in a folder for your agent
  1. Hardship letter
  2. 30 days of pay stubs
  3. 2 months of bank statements with all pages
  4. 2 years tax returns with all schedules
  5. 2 years of w-2’s
  • Price reductions at least every 30 days if still no offer.
  • Continue to market home until an acceptable offer comes in.

Once We Have A Binding Purchase & Sales Contract:

1.  Submit short sale package to lender(s) which will include:

  • Cover Page
  • Listing Agreement
  • Hardship Letter
  • Financial Worksheet
  • Pay Stubs
  • Bank Statements
  • Tax Returns
  • W-2’s
  • Preliminary HUD1 Settlement Statement
  • Purchase & Sales Agreement
  • Pre-Approval Letter From Buyer
  • Listing History

2. Negotiator will be assigned - can take up to 6 weeks

3. BPO or Broker’s Price Opinion will be ordered through a third party

  • The BPO will help the asset manager determine the price

4. Negotiator is responsible for making sure that the short sale package is complete, if package is complete and BPO is back the file is then submitted to the servicer for approval.

5. The servicer then makes the decision of whether to accept, counter or deny

6. If we get approval the lender or lender’s will send us a written approval with all acceptable terms from the bank and will set a deadline for us to close. Usually within 30 days.

*If There Are Two Lender’s Involved, Then This Entire Process Is Done Separately For Each Lender Involved.

Other Things You Should Know:

  • The short sale process can be a long one, taking anywhere from 30 days all the way up to 12 months in some cases, although most do close in under 6 months.
  • We may go through more than one buyer by the time we go to closing. Buyers get anxious and end up not wanting to wait any longer so they move on.
  • If you have any legal or tax concerns it is advised that you contact an attorney and or a CPA.
  • You will net zero on the HUD settlement statement.
  • If you have cash assets, the bank may ask you to contribute at closing.
  • If there are two lenders involved, there may be a short sale gap. This is when the first lien holder will only agree to pay the junior lien holder a certain amount but the junior lien holder requests more money in order to proceed to closing. You may be responsible for paying! It is very common for the junior lien holder to request 10% of the payoff.

Foreclosure/Notice Of Sale:

  • Remember, as soon as you miss your first mortgage payment a lender has the right to start the foreclosure process. Although, more common at three months, some banks allow six or more. As each lender may vary it is suggested that you contact your specific lender to obtain this information.
  • A notice of sale is published once a week for the four weeks before the sale. The notice is also sent to the borrower a minimum of 30 days before the sale date. The notice must include the date, time, and location of the sale; a description of the property; mortgage information; and the lender and borrower names.
  • The foreclosure sale is at the county courthouse on the first Tuesday of the month between 10:00 a.m. and 4:00 p.m. the winning bidder, if other than the lender, is required to pay the full bid amount to the person conducting the sale immediately following the sale. If a foreclosure sale is cancelled, the foreclosure process starts over again.
  • After court-ordered foreclosure sales, a confirmation hearing is scheduled and the borrower is notified within five days of the hearing. If the sale Price Of The Property Is At Least Market Value Of The Property, The Court Confirms The Sale. If Not, The Court May Order A New Sale.
  • There Is No Right Of Redemption For The Borrower Following A Foreclosure Sale In Georgia.  


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 If this communication is concerning a short sale: The recent Federal Trade Commission Ruling known as MARS Ruling requires the following disclosure: You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender (or servicer). If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us a listing fee previously stated in our listing agreement for our services. 

The Real Estate Company I work for or myself  is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.

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