The process:

 1)     To be a short sale, the homeowner usually is in default or in a position to be in default (divorce, loss of job, injury, etc) The seller most likely has tried to get their loan modified yet to no avail.  Next step is to place the home on the market as a short sale.

2)     The agent marketing the property will advertise to the public as a short sale.  Short sales are typically priced very aggressively yet it is important to remember that the bank determines the final price. 

3)     An offer is submitted to the seller and the seller accepts it in writing (unless the seller feels that the offer would not be accepted by the bank) 

4)     The seller will compile a short sale package for submittal to the lender (or lenders) that includes the executed offer, seller financial statements, bank authorization letters, previous 2 years taxes, a hardship letter and listing agreement. 

5)     Once the package is submitted to the lender the buyer and seller must wait for approval.  The lender will typically request an appraisal to be completed firstly in order to determine value.  Second, they will compare proceeds of the short sale to the proceeds received if the home is foreclosed upon in order to determine whether or not the sale can be approved. Banks such as B of A and Chase can take as long as 4 months for a response.  Patience is a virtue!

6)     The bank approves, rejects or counters the offer.  If there is acceptances of your offer then expect to close w/in 30 days after the approval is obtained. 

 It is important for a buyer who is pursuing a short sale to keep all options open.  Most offers submitted on a short sale can be cancelled at any time prior to bank approval by both the buyer or the seller.  With that, I suggest continuing to look for homes while the offer is working its way through the approval process.  More often than not, an alternate home will come onto the market that fits the buyer’s needs and IS NOT a short sale. 

 The lending institutions are working in association with the US Government to streamline short sales during the year of 2010 and beyond in order to decrease approval timeframes that in turn helps fewer homes go into foreclosure.  Personally, I have noticed that banks are already responding to short sale offers more rapidly and hope that the trend continues.

At the start of 2009 this couple sold their home in Meridian with the intention of moving to California to be near family. After months and months of looking at several homes in the Golden State, the couple became discouraged and began to sense that Boise Idaho’s pricing, along with quality of living, was too good to pass up. With that, Jim, Kristina and I began a search for their new home.

New construction, short sales, bank-owned property and occupied homes alike all had positives and negatives. When the dust settled, however, the couple found that a well-built bank-owned property within a cozy community fit the bill very nicely. Although the floors were ratty, the paint distasteful and curb appeal lacking, the home had much potential. The kitchen was open and bright with plenty of cabinet space, the floor plan flowed with ease and the quality of construction was first rate. In 2006 this home would have sold for the mid 180′s but by working together, the Beans were able to make the purchase for only $130,000.

Jim and Kristina have always been “handy” people. In fact, while in California the couple spent many weeks helping their son and daughter construct their personal home. During this time, Jim and Kristina learned trades that included installing tile, hardwood flooring, siding-you name it!! The knowledge was definitely put to good use.

The work began. Kristina began stripping the countertops and laying tile. Jim started pulling the dirty carpet and ripped vinyl planning to lay a hickory floor. All the while, doing prep work for the full interior paint job. After nearly 30 days of sleeping on cots and eating cold dinners, the Beans completed their project and invited me over to see the results of their “sweat equity”.

I could hardly believe that it was the same home! The smell of fresh paint and lacquer was prevalent while Kristina excitedly directly me toward the kitchen. Granite and tile graced the middle island, countertops and backsplashes; the cabinetry was antiqued while the stainless steel appliances topped it off. “Wow!” I exclaimed. Next, Jim spoke about the hickory flooring that was laid throughout the first floor. It was gorgeous and only cost $1,000 for the material! Jim and Kristina were proud of their work and had every right to be.

Before leaving, Jim and I discussed the market and what the home might sell for right now. At least $150,000, I mentioned, if not more. Jim stated that he and Kristina had put $2,000 (plus or minus) into material and couldn’t be more thrilled that they had realistically made $16,000 for their time. “In a year or so, Matt, we’ll be doing this again. And also, my kids down South are itching take advantage of the pricing around here”.

Jim, Kristina and I

Before Remodel--Kitchen

After Remodel--Kitchen

Before Remodel--Living Room

After Remodel--Living room/mantle