A short sale is a pre-foreclosure residential real estate transaction where the owner of the mortgage loan, the lender or lien holder (hereinafter sometimes "Lender"), agrees to (i) allow the home owner to sell his or her property for less than -- or "short" of -- the outstanding amount owed on the mortgage loan, and to (ii) release the property from the mortgage.

Homeowners who are "underwater" or "upside down" with respect to their mortgage loans, seek to sell their homes "short" to avoid the threat of foreclosure action and to lessen the credit damage that would accompany a foreclosure. Because of the "shortage", the transaction may involve "debt forgiveness" by the Lender. But this is often preferable to the Lender compared to a foreclosure – which has costs and risks for the Lender in terms of lost payments, eviction, property maintenance, insurance, taxes, fees, and the like -- or a loan modification, with the associated lack of certainty. Also, a short sale gets the non-performing mortgage loan asset off of the Lender’s financial books. Banks grant short sales for 2 reasons: the seller has a hardship, and the seller owes more on the mortgage than the home is worth.

A few examples of a hardship are: Unemployment / reduced income Divorce Medical emergency Job transfer out of town Bankruptcy Death	Typical Short Sale process at the bank: Bank acknowledges receipt of the file. This can take 10 days to a month. A negotiator is assigned. This can take 30 to 60 days. A BPO is ordered. The bank probably will refuse to share the results of the BPO. A second negotiator may be assigned. This can take another 30 days. The file is sent for review or to the PSA. This can take 2 weeks to 30 days. The bank may then request that all parties sign an Arm's-Length Affidavit. The bank issues a short sale approval letter. Some short sales get approval in 6 to 8 weeks, others take 90 to 120 days, on average.
You need an experienced short sale agent. An agent with experience in short sales will help to expedite your transaction and protect your interests. You don't want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner. John Leonardi is experienced in short-sale negotiations and can either represent the seller, buyer or both in a short sale transaction. If you would like to set up a free consultation call 916-221-0886 or email