Short sale is a transaction where sales price of home is not enough to pay amount seller owes on mortgages or liens against home
1. You find a home you like.
2. Sign the contract, and offer to purchase. a. Realtor may prepare contract if you found home through realtor. b. Attorney may prepare contract if you found home on own. c. Contract is submitted to seller for acceptance or counter offer.
3. Seller accepts offer and signs contract.
4. Attorney reviews contract. a. You have 3 days to have contract reviewed and amended for your protection. b. Contract should be immediately forwarded to your attorney for review. c. Discuss with your attorney the details of contract and the special requirements you need to have added. Be sure to discuss special issues of Short Sale. d. Attorney review is completed and the agreement is confirmed.
Contract will be subject to approval by the Sellerís mortgage holder who must agree to accept less money than they are owed. e. Sellerís mortgage holders may not approve sale. f. Sellerís mortgage holders may ask for a higher sales price. g. Sellerís mortgage holders may require the sale to be ďAS ISĒ and not allow repair credit.
5. Do Home Inspection. a. You should be at the inspection. b. Have results forwarded to your attorney. c. Discuss results with attorney to request repairs or credit. You may have to do inspection before Short Sale is approved because of time issues, and this will incur expenses even if the sale is not approved.
6. Apply for Mortgage (This should be done immediately after attorney review.) a. Buyer can start application process before signing contract to get a pre-approval letter. This can show Seller that you are qualified for the amount you intend to borrow. b. The Mortgage Lender will appraise the home. You may have to do appraisal before Short Sale is approved because of time issues, and this will incur expenses even if the sale is not approved.
7. Attorney will order Title Search and Survey a. Usually started after all home inspection issues have been agreed upon and mortgage approved, as you will be responsible for the cost even if you donít close. b. Search may show issues to be resolved including judgments against a name similar to Buyerís names. You may have to start title search and survey before Short Sale is approved because of time issues, and this will incur expense even if sale is not approved.
8. At this point, Short Sale is approved as submitted, or approved with changes, or disapproved. The short sale mortgage lender will usually allow only a short time to close.
9. Apply for an obtain homeowners insurance.
10. Your attorney and mortgage lender will schedule closing with Sellerís attorney.
11. One or two days before the closing, your attorney will tell you how much money you will need to bring to the closing. Check must be a Bank Cashierís check payable to your attorneyís trust account.
12. Buyer should do a pre-closing inspection of the home with realtor to confirm Seller is out of the house and everything there is working.
13. Come to closing and sign mortgage closing documents.
This outline is intended to be an illustration and does not cover every potential situation.
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