I put a bid down for a short sale, pre-foreclosed house 3 weeks ago and haven’t heard a response from the seller’s bank yet. The seller’s relator doesn’t have any answers for me. He does tell me that there was one other offer placed 2 1/2 months ago, but hasn’t heard whether the bank accepts that offer!!!! My offer was slightly more than their asking price, so I know it was reasonable. Please give me some advise regarding how long I should wait to hear if they accepted my bid. Does it usually take this long? Anyone have any experience buying a short sale house?

Short sale real estate references selling property for less than the balance owed on the mortgage loan. This type of transaction is occasionally offered to borrowers who have become delinquent on their home loan and can no longer afford mortgage payments. In order to avoid the expense associated with foreclosure, banks allow borrowers to sell their house at a reduced price.

Entering into short sale real estate contracts is a lengthy process. Oftentimes, borrowers enlist assistance from a real estate lawyer, realty agent, or short sale specialist. However, borrowers must obtain approval from their lender before listing their home as a short sale property.

Not all banks engage in short selling. Those that do require borrowers to prove they are financially insolvent and unable to fulfill their financial obligation. Short sales are generally reserved for borrowers who do not possess home equity and owe more than their home is worth.

In some instances, banks will grant short sale approval to borrowers who possess home equity and are current on loan payments. Borrowers facing financial challenges due to the death of a spouse, divorce or terminal illness might qualify for real estate short sale.

The first step involves contacting the bank’s loss mitigation department. Loss mitigators usually attempt to qualify borrowers for loan modifications to help them remain in their home. If short selling is an option, borrowers must submit financial and real estate documents to their assigned loss mitigator.

Although short sale protocol varies by lender, most require the same financial documents. Short sale packets consist of legal forms, financial records and a letter of hardship. These documents can be your ticket to financial freedom.

Take time to review the information, fill out every form, double-check everything twice, have a real estate attorney review the documents, and make certain to return the packet on time. Do not lie or exaggerate information. Providing false financial information in a real estate transaction is a federal offense which carries a penalty of jail time and expensive fines.

The short sale hardship letter could very well be the most important letter you will ever write. Hardship letters give borrowers the opportunity to explain circumstances that caused them to become delinquent on their home mortgage loan.

Letters of hardship should be written in chronological order, outlining events that caused financial problems. It is important to list any action taken to overcome financial challenges. If you discontinued cable TV and cut up credit cards, state these facts in the hardship letter.

Once short sale approval is obtained, borrowers are required to sell their property within a specified timeframe. Most lenders require borrowers to have a prequalified buyer in place before authorizing a short sale transaction. Others grant borrowers’ time to list their property through a realtor. If the property is not sold by the deadline, lenders commence with foreclosure action.

One lesser known option for selling foreclosure short sale real estate is to seek out private investors. Many real estate investors are familiar with short selling and can assist throughout the process.

Before signing short sale contracts, be certain to inquire which type of short sale agreement is offered. Some mortgage lenders hold borrowers responsible for the deficiency amount of the sale price and loan balance. If borrowers are unable to pay the amount in full, lenders obtain a court authorized judgment which remains on credit reports until restitution is paid in full.

Other banks accept the sale price as payment in full and do not hold borrowers responsible for the deficiency. This is referred to as Payment in Full without Pursuit of Deficiency Judgment. Obviously, this is the preferred short sale real estate option.

A short sale home involves property that is in the process of being foreclosed. Although the bank has not yet seized the house, borrowers have little time before losing their property. Lenders will occasionally allow the homeowner to sell their home for less than they owe on their mortgage note through the process of a short sale.

Purchasing a short sale home is basically the same as buying any real estate for sale. The sale of these properties is generally facilitated by a realtor. The homeowner is required to work with an assigned bank loss mitigator.

An employee of the bank, loss mitigators act as a mediator between the seller, buyer and lender. They also assist the borrower throughout the short sale process and provide guidelines which must be strictly adhered to.

Each mortgage lender institutes protocol for establishing short sale approval. Many lenders will accept the purchase price as payment in full toward the delinquent mortgage note. Other lenders require the borrower to repay the difference between the purchase price and loan balance.

If the borrower is unable to pay the difference at the time of the sale, the bank will issue a Deficiency Judgment. These judgments wreak havoc on the borrower’s credit history. This black mark prohibits borrowers from obtaining another mortgage for years to come. The judgment remains in place until paid in full.

Borrowers should give careful consideration to the long term affects when lenders issue deficiency judgments. Depending on the amount owed, it might be a smarter financial decision to allow the home to fall into foreclosure.

When foreclosure is looming, borrowers should request a Deed in Lieu of Foreclosure. This allows borrowers to return the house to the lender and walk away from the property without owing additional money. The homeowner will lose all monies vested in the home and cannot receive sale proceeds if the property sells for more than is owed on the loan.

Borrowers must obtain short sale approval from their lender before they can sell their house for less than is owed. Since the bank is accepting a financial loss on the property, borrowers will be subjected to financial scrutiny. Banks require borrowers to submit a short sale packet and provide substantial financial documentation.

Banks accept approximately 10-percent of short sale requests. Homeowners can improve their chance of obtaining approval by working with a short sale specialist. Some realtors have received training in the short sale process. A few real estate investors have been trained in this niche as well.

Borrowers who need to sell their home to satisfy a short sale agreement should consider locating private real estate investors. Many investors purchase homes with cash to obtain additional negotiation power and quickly close the deal.

Locate real estate investors by conducting research online. Attend local real estate investment networking meetings. Check the Classifieds section in newspapers and real estate publications. Ask friends, family or co-workers for referrals.

It can be very frustrating to the buyer who already has his loan ready to close and is on the contract to buy that house. What would you advise that buyer to do?

Does the seller pay the mortgage, taxes, utilities on a house with an offer waiting for bank approval? Once the bank approves and accept the short sale offer might there be additional charges if the seller has not been paying mortgage on a home where he no longer lives? If they accept my offer do they often come up with other charges left behind by the former owner?

1. Official record: 1bedroom/ 0.75 bath (shower+toilet), the back patio has been converted to a bonus room and used as a second bedroom (small).
2. 720 sq ft indoor, 2040 lot sz. Built in 1915, very well maintened. Previous owner did put a lot of interior upgrades with new appliances and new paint. It’s in move-in condition.
3. It’s a Bank-owned REO property. The previous owner’s unpaid mortgage balance to the bank was $359K. Listing price now is $380K. The comps in the area is about $425K to 475K.
4. Located in a very good neighborhood in Los Angeles. Close to freeway and shopping. School district is just ok, not excellent.
5. Officially, only one parking space available (not a covered garage). Street parking is not a problem.
6. Just listed in the market for 7 days.
7. Buyer would like to pay 20% down, and the credit is excellent.

How much do you think this house is worth?

4 br/2 ba. 1180sf built in 1972 at 615 Monica near the back gate. Call Jim the Realtor 760-434-5000

The bank approved my short sale. However, I found out that if I don’t buy, it will go to foreclosure in the next 2 months. Do I have more bargining power with that being known?

thanks to everyone for their honest answers

We been at this short sale since Feb. The short sale negioater approved everything and submitted his approval to be signed off by his manager. That was 3 weeks ago and we are still waiting.