What is a short sale?

A simple definition provided by Wikipedia is:

A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan.[1] It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.[2]

What options are available to keep my home?

There are several options to look at before considering a short sale.

  1. If your loan payments are too high, you should consider asking your mortgage holder for a loan modification. Go to the "Making Homes Affordable" web site for more information.
  2. If you have received a Notice of Default where you are behind in your mortgage payments, you may be able to borrow funds to bring a small or temporary deficiency up to date.
  3. If you are a California resident of low or moderate income, you may be able to participate in the CalFHA "Keep Your Home" program.
  4. The Federal Housing Administration also has created a program called "Hope Now" with a self assessment and other information on how you may be able to stay in your home.

How do we help short sale sellers?

The most difficult fact that faces short sale sellers today is the prospect of losing their home, many times through no fault of their own due to a documented hardship such as a job loss. Sellers must come to grip with the stark reality that they must mentally and physically move out of their home voluntarily before forcible foreclosure.

We consult with you on:

  • as fewer than 35% of short sales actually succeed, we qualify your unique situation and give you an honest opinion on the likelihood of a successful short sale. 
  • if we believe your short sale transaction may not complete successfully, we will tell you up-front so you don't waste your time, you can prepare for the next steps, and we don't give a false sense of success.
  • packaging your transaction and provide professional project management to ensure your process is as easy as possible. 
  • we provide a first line of communication with your lender to help reduce the stress of difficult and potentially contentious conversations. 
  • we negotiate with your lender, and buyer's agent to ensure all parties' requirements are on the table for discussion to help reduce surprises that can cause more stress and increase the probability of a successful sale. Our negotiation skills alone are worth more than any fees paid to us.
  • we work with you on finding a new place to live so you know you have a safe landing pad ready to go.
  • we continually market your property online in order to attract the right buyer for your home
  • we produce a detailed market analysis with realistic market economic data and pricing required by lenders so lenders see it is to their advantage to sell short instead of foreclosing and taking the property onto their books.
  • we coordinate all the transaction details and regulatory compliance so you don't need to worry about those details.

How do we help short sale buyers?

As a buyer considering purchasing a short sale, there are some critical questions we ask you to help determine if this is the right type of real estate transaction to start:

  1. Am I willing to demonstrate to TWO lenders, both yours and the seller's, that you have the credit worthiness (FICO score) and finances on hand readily available to successfully complete the purchase?
  2. Am I willing to wait 1, 2, 3, up to 6-8 months for the process to complete with multiple lenders and mortgage insurers with sometimes competing requirements?
  3. Am I willing to walk away in the event the seller is presented with unacceptable terms from lenders or mortgage insurers at the last minute?
  4. Am I willing to make an offer to purchase that is within the price ranges shown in the comparable market analysis?
  5. Am I willing to take the property as-is, with no credits for repairs from the lender or seller?
  6. Am I willing to pay for a property inspection on my own and risk $450 that the transaction may fail anyway?
  7. Am I willing to work with my lender or mortgage broker on an indefinite waiting period for approval, then being able to accept the current market mortgage interest rates when short sale approval is provided by all parties?
  8. Can I close the transaction within 10 days after receiving short sale approval from the lender and/or mortgage insurer?
  9. Am I prepared for the lenders or mortgage insurers to request contribution of additional funds from me in order to approve the short sale transaction?

If any of the above questions has a "NO" response, then you should seriously consider not participating in a short sale purchase transaction.

If you have the time, money, and patience, and answered "YES" to the questions above, then you may have a successful short sale purchase experience. We then provide professional project management to guide you through the highly complex purchase process. We let you know what you and we can control and what is out of our control.

Remember: the transaction does not proceed until either OR both of the lender and mortgage insurer say so. Hang in there until then!

Contact Us

Contact us today if you would like to discuss short sales in Santa Clara County's Silicon Valley.

You can reach Paul Caloca directly at 408-898-4963 or via email consultants@papasgroup.com.

We respect your privacy and all conversations with us are confidential.