Short Sale FAQs

What is a short sale?

  • A short sale is real estate transaction that allows a house to be sold for less than what is owed on the mortgage. The lender will accept that amount and consider the mortgage to be paid in full.

What are the benefits of a short sale?

  • A short sale allows for a house to be sold regardless of how much is owed on the mortgage. This prevents the buyer from buying a house with no-equity, or the seller from bringing a large sum of money to closing in order to pay off the loan.
  • In a well-negotiated process, the seller can walk away without any judgments or recourse for the amount that was lost.
  • Most homeowners can purchase another house through FHA in about 2 years after the short sale is completed.
  • This is a free loss mitigation option to avoid a foreclosure.

What are the disadvantages of a short sale?

  • The short sale process can be lengthy in comparison to a traditional sale. The missed mortgage payments will be reported to the credit bureaus, and this does not stop until the short sale is completed.
  • The homeowner will be required to provide financials and documents as requested by the lender.

What are the qualifications for a short sale?

  • You must be behind on your mortgage payments.
  • Your house must be worth less than what you owe to the lender.
  • You must be facing a financial hardship that prevents you from making the mortgage payments.
  • If you are unsure on whether you qualify for a short sale, you may contact us to discuss your options at 972-342-0011.

Why would a mortgage company agree to accept a Short Sale?

  • When the lender forecloses, they will have to pay all the costs involved in selling the house, such as hiring a Real Estate Agent, making repairs on the house, maintaining the yard, and finding a buyer. But they will only receive the market value of the house. By accepting a short sale, the lender does not have to take on any extra cost of having a vacate house, which gives them more profit with the same market value.

What sort of hardship would the lender consider legitimate?

  • Common hardships are divorce, death of a spouse/borrower, loss of a job, loss of income or reduced income, forced relocation, and overwhelming medical bills. If you have questions about your specific situation, call us for more details.

When should I find out if I qualify?

  • As soon as possible. We can determine if you qualify by reviewing your house value and discussing your hardship. We will not start the short sale until we are certain that you qualify. If you are getting behind on your mortgage payments, we can step in and see if you meet the qualifications for a short sale.

How much will it cost me to do a short sale?

  • This is a free service for you as the homeowner. At Oyezz Real Estate, you will never be charged an upfront fee to process your short sale. We will get paid at closing, after a successful short sale, and the lender will cover that fee. We do not require any out-of-pocket money from you.

How long does the short sale process take?

  • Our average time for a short sale is between 4 to 6 months, but it depends on various factors.

Can a short sale be completed on a property with more than one mortgage lien on it?

  • Absolutely! As part of the short sale process, the mortgage lender will pay the other liens, whether it is another mortgage or city lien. There may be some negotiations needed but it is very possible.

If I have two properties, can I do a short sale for both at the same time?

  • Yes, a short sale can be done if both properties qualify.

If the house is in rough shape and needs repairs, can a short sale still be done?

  • Yes, the condition of the house does not matter in a short sale. The lender will take into consideration all the necessary repairs needed when determining the value of the house.

Can I do a short sale with my Realtor?

  • Any Realtor can do a short sale. However, he/she should have recent experience with successfully completing a short sale because the process can be time consuming and complex.

What do I have to do during the short sale process?

  • Your cooperation is very important. You will be required to provide updated bank statements and pay stubs as requested. Without the requested paperwork, the lender will not move forward with the short sale review. You will also need to cooperate with showings when needed.

What documentation will I need to start the short sale process?

  • You will need to provide financials including bank statements, pay stubs, and tax returns. This is required for the lender to see that you are facing a financial hardship, and can no longer afford your mortgage. The lender will also require you to complete and sign a loss mitigation packet, which will all be provided and explained to you at the initial meeting.

How will I know that I am being released from the debt?

  • At closing, everything will be disclosed in the approval letter. It will state that you are being released from the debt and that the lender cannot seek recourse in the future.

Will I need a lawyer present during the short sale process?

  • A lawyer does not need to be present; however we do have a lawyer on staff to step in when needed.

What are my chances of a successful short sale?

  • Our success rate is about 90% but your chances will depend on the servicer, loan history, and your specific situation.

How can I be certain that the paperwork and process is official?

  • We will stay in communication with you throughout the process and you will receive a copy of all the required paperwork you signed.
  • We are a licensed brokerage in Texas through the Texas Real Estate Commission. You will sign and receive a copy of the “Information about Brokerage Services” which provides you with our license numbers and contact information.

Will I be required to have a “Short Sale” sign in front of my yard?

  • Although having a yard sign is not required, we can advise that a sign in the yard will attract buyers. Our yard sign will advertise that the house is “For Sale” and there is not any short sale verbiage on it.

How long will the house need to be on the market?

  • The house will be on market until the house is sold.

How is the price of my house determined during a short sale?

  • The price of your house will be determined by the lender through an appraisal or BPO report. This will guide the lender on what price they will accept for the short sale.

What if I do not receive any offers on my house?

  • When your house is listed for sale, it will be listed at the market value, and continue to be reduced until an offer is received.

How does a short sale affect the buyer?

  • From a buyer’s perspective, nothing will be different as long as they have proof of funds and be willing to wait a little longer than normal.

Will a home inspection be required during a short sale?

  • The buyer will determine whether an inspection will be done.

Can I live in the property while the short sale is going on?

  • Yes, we encourage you to occupy the property to avoid vandalism and to qualify for the relocation assistance program.

Is there a set time period to close the short sale?

  • Once the approval letter is received, the short sale has to be closed within 30 days. The approval letter will include all the information for closing such as the buyer, the sales price of the house, any seller relocation money approved, and the deadline.

Will I receive any money from the short sale?

  • You will not receive any money from the proceeds of the sale. Although nothing is guaranteed, we apply every client for the relocation assistance program to help after the completion of a short sale. If you are approved for any amount, you will money from that program after closing.

Will I be required to pay the balance of what I still owe on the house?

  • Through Oyezz’s well-negotiated process, you will not be responsible to pay the debt after the house is sold at market value because the lender will forgive that debt.

How does a short sale differ from a traditional sale?

  • In a traditional sale, the homeowner will dictate the sales price, terms and timeline. In a short sale, the lender will approve the sales price and terms because they are taking a loss on the loan.

My loan is already in foreclosure. Can I still pursue the option to sell my house for less than I owe?

  • You can pursue a short sale even if your house is already in the foreclosure process. A short sale review can delay the foreclosure process.

I am behind on my payments. How long until the bank forecloses?

  • The foreclosure process will depend on the lender and the location of the property. Texas does have one of the fastest turnaround times for foreclosure. Most lenders may start the foreclosure process after you are behind 3 months of payments.
  • In Texas, the lender is required to mail you a letter of demand, informing you that you have 20 days to pay the delinquent payments or they will start the foreclosure process.
  • You should start considering loss mitigation solutions such as a loan modification or short sale as soon as you miss your first payment.

Can the lender still proceed with the foreclosure during the short sale process?

  • Yes, the foreclosure process may still proceed. However, during the short sale review, we will monitor the foreclosure activity and take the necessary steps to get the foreclosure postponed.

Would it be easier to let my house foreclose?

  • It would be easier but not beneficial. It also leaves you open for tax consequences, lawsuits, and recourse from the lender. A short sale would eliminate all of that.

Can I simply deed my property to someone else and avoid the hassle?

  • If you were to give your deed away, you would still be liable for the debt and tax consequences associated with the house. The deed is only for the ownership of the house, therefore you would be responsible for the loan you took out for that house.

What it the difference between having a foreclosure on my credit record verses a short sale?

  • A short sale on your credit report will appear as a “settled debt” meaning that the debt has been paid off. A foreclosure will severely damage your credit because it shows that you walked away from your financial obligation with the mortgage lender. It also stays with you for about 7 years, and that foreclosure information will be recorded in the public records.

How soon after a short sale can I buy another house?

  • Depending on the rest of your credit, you could qualify with FHA to buy another house within 2 to 3 years after the short sale is complete.