Foreclosure Compared to Short Sale

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HAFA Short Sales Fact Sheet


HAFA Short Sales Fact Sheet (Please click below for the complete fact sheet.)

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How to Write a Short Sale Hardship Letter

A Hardship Letter for a Short Sale is a letter that you write to your bank or financial institution requesting that the bank consider a short sale to stop the foreclosure of your home. At his point I must strongly suggest that you obtain the services of a qualified Short Sale Negotiator.  I reputable one will take his/her fee from the real estate commission, and not out of your pocket.  The first meeting should be free of charge.  However, there are a number of do-it-yourselfers out there; and if you’re bound and determined to do-it-yourself, following is what you should do:

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What is a Short Sale Negotiator (SSN)?

An SSN is the person the seller designates to work with his lenders as his representative. It can be his agent, attorney, 3rd party or anyone else. The ideal situation would be an experienced attorney so that other options can also be explored. An SSN should be all about the seller and trying to do what’s best for the seller. I would recommend an attorney who is a proven success in the field of personal finance and short sales. The first meeting should be to consult with the seller to understand what the seller’s situation is. It is possible that the seller would be best served filing BK. A truly good listing agent should want what is best for the seller, even if that means not listing the house.

What does an SSN actually do?

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Buying a Short Sale Property

Frequently Asked Questions. Below are the questions, then click the link at the end of the questions for the answers.


  1. What is a short sale?
  2. Is the mortgage lender’s approval necessary in a short sale?
  3. Why do homeowners sell their homes through a short sale?
  4. Who benefits from a short sale and how do they benefit?
  5. What are the pitfalls of buying a short sale property?
  6. If the seller is selling a property for less than what they bought it for, does that mean the buyer instantly earns equity on the property?
  7. Why does the short sale purchase process usually take longer that a regular purchase?
  8. Can I complete a short sale purchase transaction on my own?

Short Sale Listings

  1. How can I find properties that are being sold on a short sale?
  2. What is the difference between a short sale listing that says “approved for short sale” and “third-party review required”?

Short Sale Approval

  1. What are the reasons the mortgage lender will not approve a short sale?
  2. What is a settlement statement?

Making an Offer for a Short Sale Property

  1. What information should I look up to help me decide if I should pursue a short sale purchase?
  2. Where do I find this information?
  3. Should my offer match the listed price?
  4. Should I start with a lowball offer in case bidding or negotiations occur?
  5. What should be included when an offer is submitted?
  6. What are the reasons the mortgage lender would reject an offer?
  7. How can I increase the chances of my offer being accepted?
  8. Should I start shopping for a lender even if the property I am interested in has not been approved for a short sale?

Other Impediments to a Short Sale

  1. Why does a short sale become more difficult when there are more lenders involved?
  2. Can the seller impede the short sale process?

Short Sale Contracts

  1. What is the short sale addendum?
  2. Can the home seller cancel the short sale contract?

To see the answers, please click HERE.


Distressed Property Market – As you are all aware, today’s real estate market differs a great deal from the traditional market.  Following is a simple comparison of these markets.

A Simple Comparison of Markets and Mindsets


Traditional Market

Distressed Property Market


Seeking to maximize their sales price, taking full advantage of their home’s appreciation

Seeking whatever they can get, or more likely, seeking to get out from under an upside-down mortgage


Seeking the right home at a reasonable price

Seeking the very best deal, or even a steal


Generally open to making loans and into creating new products,  programs and policies to encourage borrowing

Lending criteria dramatically tightened and loans are hard to get.  Lenders have become sellers of distressed property, either before (short sale) or after (foreclosure / REO)


Eager to jump in and generally able to master transaction basics

Often not well informed about the unique transaction requirements of distressed properties and often unaware of how best to coach their clients / An informed agent is critical in this market


Should I Buy a Short Sale?

For an investor, buying a short sale can be a viable option. However, the timeframe from the offer to the close is totally up to the lender.

The process begins with the seller sending the required documents to the mortgage lender seeking the approval to move forward with a short sale. Hopefully, the seller has hired a realtor who understands short sales and has appropriately advised the seller and prepared a well thought out package for the lender.

Following is a typical buyer’s short sale process: Read the rest of this entry »