Being the number one short sale agent team in Georgia requires that we have a specific and precise process.  This process markets your home, prepares your statement to your lender,  and includes a partner law firm that negotiates on your behalf with your lender.  Your lender pays both our fees and the law firm’s fees because they don’t want to deal with you directly.  They require you to have assistance.

We have divided the job of getting your home sold as a short sale between the law firm and us.  Duffy Realty does the marketing of your home to find a buyer who is ready, willing and able.  The law firm’s job is to prepare and defend your case to your lender that you cannot afford to keep your home and your only other option is to foreclose.  But the lender really does not want to foreclose.

Ultimately, your lender wants you to do a short sale when you can no longer pay for your mortgage.  Having a short sale in process may delay foreclosure.   But to make the short sale process work, nothing happens until we get a buyer.

The lender’s guidelines include that if you have a FHA loan, the lender will require you to be 31 days in default before they will approve the short sale.  With a conventional mortgage or a VA loan, there are no written guidelines, but your inability to pay your mortgage is the reason that they will approve the short sale.   You need to prove a hardship that makes it difficult for you to pay your mortgage.

When the lender approves the short sale, they will most likely waive all of the balance owed and give you a satisfaction of mortgage.  They may ask you to bring some cash to closing or to do a promissory note depending on your assets. At that point, the law firm that represents you will do their best to get you to a zero cash settlement.   However, at the time of lender approval, you are in full control with what is going to happen and if will proceed with the short sale.

If the home is your primary residence, you will not owe taxes per the IRS rules and regulations if you can close by December 31, 2012.  If the home is an investment, you will be sent a 1099-C and will owe your taxable rate against the deficiency, as the government believes that the amount waived is income.  At that point, you may be able to negotiate with the IRS based on any improvements that you have made.

Because of the lender guidelines, you are not allowed to pay any of the closing costs for the buyer, make any repairs unless absolutely necessary, and you are not supposed to make any money on the transaction unless there are programs applicable to your situation and your lender.  However, if you have liens, you and the law firm will need to work together to get the liens removed from the home.

You can live in the home until closing.  If we started today and got a buyer today, you will still live in the home 3 to 4 months.  That is the minimum amount of time that you should be focusing on.

The first steps are for us to list the home and attract a buyer.  We will do all the pricing, the marketing and we will actively seek a buyer that is ready, willing and able.  You do not need to make the home in “show condition”, but you will want to clean it up and keep it clean while we are marketing the home.  You will have a lockbox on the door that agents can use after they give you a courtesy call that they are coming.  We want you to show the property even after we get a buyer so that we can secure more than one buyer at a time, in case the first buyer fails to purchase.

Once we have a buyer, we will collect all of the documents from you that the law firm needs to state your case to your lender.  And at that point, you will be dealing primarily with the law firm.  We also have a secure website for your property, that both the law firm and Duffy updates, where you can get  updates on what is happening with your lender .
It takes about 60 days on most loans, and maybe more, for us to get an approval from the lender.  During that first 60 days, things are really slow and we may not hear much of anything from the lender.  You continue to live in the home.  You get updates about what is going on by logging into the website for your home.

You will be updating the law firm with new bank statements, pay stubs and any Acceleration notices that you get.  You will have your own case manager at the law firm.

After you get an approval that is acceptable to you, which again, we want it to eliminate the debt and relieve you of the burden of the debt, a closing date will be set.

For the closing, you can either go to the law firm’s office in Alpharetta (or it may be scheduled at the buyer’s agent’s office nearest your home), or you can go a few days early and sign your part, or – if you have already moved away, the law firm can send you the documents by mail and you can sign them.

When the transaction is closed with your lender, they may or may not report a short sale to the credit bureaus.  If they do, it may take up to 2 years before you can buy a home again although we have had some people immediately buy a home again.  The good news is that a short sale, unlike a foreclosure, does not hurt you in your overall credit history.