Short Sale 101 for Realtors®

This information has been shortened and put into outline form.

Ø A "short sale" is a transaction in which a lender agrees to accept less than it is owed to permit a sale of the property which secures its note.

Ø The lender will require a market analysis from the REALTOR®; listing the property.

Ø The lender will want an explanation of the circumstances which created the need for the short pay-off transaction. (A job transfer for example.)

Ø The lender will require: financial statements showing the seller's assets, liabilities, income, and expenses.

Ø If this information is provided, there are potentially grave consequences for your seller if a short pay-off is not approved.

Ø In certain circumstances, providing the financial information actually decreases the likelihood of closing on the short pay-off.

Ø It is important that in any contract which your seller accepts, his obligation to close is contingent upon successful negotiations with the lender.

Ø The seller should be advised to seek legal counsel regarding steps which can be taken to ameliorate the credit consequences of the work-out.

Ø Closing dates may need to be extended.

Ø Sellers should consult their tax advisors.