I just got my short sale listing 2122 Ventura Place in Santa Clara in contract. The sellers and I initially tried to sell the home where the sellers could possible come out clean without a short sale on their record. As the market deteriorated however, this proved to be an impossible venture and eventually we all agreed that this is the best course.
Now begins the time consuming task of working with the lender, in this case Countrywide Home Loans, to get the short sale approved. For those of you who are unfamiliar with short sale properties, short sale occurs when the proceeds from the sale of a home will not cover the loans or liens against the home. In this situation a seller, in order to sell the home, would have to bring money into closing or negotiate with the lien holders to take less than the amounts owed. The motivation for the secondary lien holders to negotiate would be to get some money as opposed to none. In the event of a foreclosure the primary lien holder would take title, and the property would become an REO or Bank Owned.
In many cases it is to the lender’s benefit to work with a short sale as opposed to waiting for the home to be foreclosed. This is assuming the seller’s are in default and have stopped paying the mortgage. This Santa Clara home has only one loan which makes the negotiation much easier than dealing with two two loans and possibly two separate lenders.
Now that I have received an offer I can submit it to the lender to get the short sale approved. I need to provide the lender a summary of the seller’s monthly earnings and expenses. In addition the lender will also need a copy of the purchase contract, estimated net-sheet, two months of pay check stubs and 3 months of bank account statements. This is referred to as the Short Sale Package, and different lenders require different items. Now that I have submitted the package, I will follow up tomorrow to ensure that they received it in its entirety, and wait for the approval. I will continue to update this blog as the transaction progresses.