Foreclosure, Short Sale, Bank Owned Homes (REO), Distressed Properties

What Is A "Short Sale"?

In real estate, a short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In a short sale, the bank or mortgage lender agrees to take a reduced amount on a loan balance, due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation department. The home owner gets a contract on the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. The net amount, after commissions and excise tax, is usually less than the outstanding debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale.

Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation. If the seller of a property has the financial ability to bring cash to the table at closing for a mortgage debt short fall, this scenario would not be considered a short sale.

A short sale is typically executed to prevent a home from going to the foreclosure auction, but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property. Often a bank will allow a short sale if they believe it will result in a smaller financial loss than foreclosing, as there are carrying costs associated with a foreclosure. A bank will typically determine the amount of equity, or lack thereof, by determining the probable selling price from a Broker Price Opinion (BPO) (also known as a Broker Opinion of Value - BOV) or through a valuation by an appraiser.

For the homeowner, some advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer. Hence why it is important to have an attorney involved with the bank negotiations on a short sale transaction.

How Do We Handle A Short Sale Transaction

The Cascade Team connects our clients with a real estate attorney work with them throughout the process. We cover the cost of the attorney out of our commission, so there is no out of pocket expense to the seller. The attorney will work to collect all the seller’s information required by the lender when evaluating a short sale and will submit that information to the lender with the purchase and sale contract. Because the selling price yields an amount less than what is owed to the creditor, all closing costs are absorbed by the creditor and there are no out of pocket costs to the seller. The Cascade Team utilizes our same aggressive marketing strategies to obtain an offer as quickly as possible and turns that over to the attorney for negotiation with the lender.

Advantages For Our Clients

As a seller working with The Cascade Team on a short sale transaction, you will receive the following benefits:

1. Direct access to the attorney, with all the client/attorney privileges, with no out of pocket expense. All your information is held private and you do not need to disclose any of your financial information to us.
2. You get the same aggressive marketing program to bring in an offer as quickly as possible.
3. You have the attorney negotiating directly with the lender. This carries more weight that having a real estate professional trying to negotiate.
4. The attorney will work on your behalf with the lender to eliminate any financial judgments from following you after the home has closed.
5. You will have your real estate agent as a trusted resource to walk you through the process.
6. Full commission paid to the Buyer’s Agent!  This is very important, as most banks do not agree to pay a full commission to real estate agents on a short sale. In addition, short sales tend to be more work for the agents and take longer to close. Therefore many agents purposefully guide their clients away from short sale properties. The Cascade Team guarantees the selling agent gets the full 3% SOC (Selling Office Commission). With our in-house attorney negotiating directly with the bank, other agents find that short sale transactions handled through The Cascade Team, are easier, more likely to close, AND they get paid a full commission. This means that you, our client, get your home sold quicker.

If you are in a situation where you need to sell your home, and you owe more than what it is worth, please contact one of our agents for more information on how we might assist you through this process.