An Overview of Short Sales:

An Overview of Short Sales:

By: Elaine VonCannon ABR, SRES, REALTOR, Notary, Team Leader, Residential and Commercial Property Manager, Managing Partner VonCannon-Starke Commercial Division, Member of the National Association of Residential Property Managers, Award Winning Agent, RE/MAX Hall of Fame, Licensed in Virginia, Member of Commercial Council VAR, Director of the WAAR MLS Board

I have written a lot of articles on Short Sales and Foreclosures. I have been on TV, I have a radio show called "Ask the Expert on Real Estate", it is produced and aired on WMBG 740 AM, here in Williamsburg, James City, New Kent and York County area.

Definition of a short sale A short sale is when the lender agrees to accept less than what is owed on the mortgage. The short sale process proceeds as follows:

• The home is listed with a Realtor.
• Realtor markets the property (MLS, REALTOR.com, internet, etc.).
• A Buyer is found and makes offer on the property.
• The Seller and Buyer may or may not need to negotiate.
• The Seller and Buyer has a meeting of the minds and a contract is ratified.
• The ratified contract is sent to bank for approval (now having the correct person in the correct department can be very tricky, so keep a log).
• The bank may or may not approve the contract, may or may not send out an appraisal or order a BPO. Bank may counter with terms or price.
• Meeting of the minds again (buyer accepts counter). After bank approval, buyers and sellers close.

That is just a basic overview of the short sale process. It may seem like a simple process, but it is not.

Now this will work if you have only one mortgage company involved. What if you have a 2nd mortgage on the home? This is where the wheels go off the track, so to speak. The 2nd mortgage wants more that what the 1^st is willing to give them. The 2^nd lender refuses to corporate. Now you are asking who is doing these negotiations. The seller, the closing agent or the Listing Agent would be the one to get this done.

The second may still refuse to close. So the property could still go into foreclosure. I know this does not make sense, but it does happen. If the property goes in foreclosure then the 2^nd lender will get nothing. So you would think that the 2^nd lender would want something rather than nothing.

Virginia is currently a state in which the lenders may go after the Seller for the amount they have lost on the short sale or foreclosure of the property. The amount lost could also be a taxable event with the IRS for the Seller.

In some cases, the difference between the two numbers is being forgiven by the mortgage lender. In others, the homeowner must arrange with the lender to settle the rest of the debt.

Theoretically, short sales are less costly to a lender than foreclosures. There are fewer legal costs involved, for example. But the chief attraction of a short sale is that there is a buyer for the house, while a foreclosed property can sit in a lender's portfolio for months.

Here is a list of banks and the average amount of time it takes to close a short sale. These are from my own experiences with short sales.

• GMAC - 6 months
• Citi Mortgage - 7.5 months
• Wells Fargo - 8 months
• Bank Of America - 13 months
• IndyMac - 2 months
• SunTrust - 6 months
• Wachovia - 12 months (bought out by Wells Fargo)
• Private Investors who bought mortgages when they were being bundled and sold who knows and they may never agree

Visit my web sites to view other listings at www.voncannonrealestate.com www.estatesinvirginia.com www.elainesrealestate.com You will also find articles and more information on homes, the Virginia real estate market and my team.