Since national foreclosures are at all-time highs, real estate agents and investors are jumping into the niche, many of them beginners. Sellers facing foreclosure may choose a short sale when they do not have enough equity to cover closing costs and needed repairs.

STEP-BY-STEP OVERVIEW OF THE SHORT SALE PROCESS

1. Owner requests a short sale packet from the lender. If the customer service rep doesn't know anything, speak to the Loss Mitigation Department. TIP: The lender can record the conversation and use any info you provide against you, so have an attorney or representative present, if possible.

2.Owner completes the packet. You'll provide financial documentation, write an explanation letter, and state whether your situation is permanent. If your situation is not permanent, it's over. No short sale.

3. Owner lists the home in MLS and makes "reasonable" marketing efforts. A short sale specialist is often a listing agent who will attract investors. They can also be unlicensed real estate investors who negotiates price and terms directly with the bank. In that case, a third-party agent is used. The listing agent will determine the current market value of the home minus repairs.

4.The lender requests a Broker Price Opinion (BPO) from their own agent. Based on this information and/or an appraisal, they may accept, decline, or further negotiate the short sale offer.
TOP 4 TIME AND MONEY-WASTING SHORT SALE "GOTCHAS" 
A short sale may sound like a great option for sellers with little or no equity, but there are gotchas that Kevin Federline may not realize:

• The seller must be at least 60 days past due. Yep! If you're making payments, you don't qualify.
• Read your fine print! You avoid a foreclosure, but when your credit score drops, interest rates often jump to 20-30%...even if you're paying on time.
• The bank moves slowly and turnover is high in the Loss Mitigation Department. Short sales can take 3-6 months. If your rep at the bank quits, you get to start with a new one.
• The bank should accept the short sale as final and complete payment. Otherwise, you may owe the IRS if the shortfall is taxed as income. Talk to a CPA and lawyer for more info.

YOUR BEST BET FOR SHORT-SALE FORECLOSURE "RESCUE"

If you have a Federline working with you, watch out! Inexperienced real estate agents and investors (Some Dude) can cause foreclosures unless they become experts or partner with one. Mr. Federline will need to know the process inside and out, negotiate well, meet all deadlines, pay attention to details, and stay in touch with the bank almost daily.

Short sales and foreclosure situations are stressful and time-consuming. The best bet is to use an expert Short Sale or Loss Mitigation Specialist. Loss Mitigation Certification courses exist, but the true test is the number of transactions the specialist closed successfully. Even better, make sure at least 50-75% of the specialist's business comes from working with foreclosures. 

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