A short sale is the selling of one's home/property in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner/property owner. In some cases, the difference in what is owed (also called the short fall of the amount that is owed thus the name Short Sale) is forgiven by the lender, and in other cases the homeowner/property owner must make arrangements with the lender to settle the remainder of the debt.

A short sale can also be the an option for homeowners who are “upside down” on mortgages.  A short sale may have less impact on their credit history than as a foreclosure. Homeowners may qualify for another mortgage sooner once they get back on their feet financially when doing a Short Sale than by going through a foreclosure process.

Why are there more short sales?

The recent economic crisis, including rising unemployment, and droping of home prices across the country are some of the very basic factors of the increase in Short Sales. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses.

What is being done to address or eliminate challenges of Foreclosure?

On May 14, 2009, the Obama Administration announced its upcoming Foreclosure Alternatives Program. Among other things, the new program:

• Establishes financial incentives for servicers, sellers, and second lien holders to encourage the completion of short-sale transactions.
  
• Requires that a timeline, of no fewer than 90 days, be set to allow a homeowner to sell a home, without threat of foreclosure action.
  
• Requires the short sale agreement to specify reasonable and customary real estate commissions and costs to be deducted from the sales prices. (The servicer must agree not to negotiate a lower commission after receiving an offer.)
  
• Will provide standardized documents, including short-sale agreements and offer acceptance letters.
  

 Challenges that short sales presented for REALTORS®?

The rapid increase in the number of short sales, and the short sales process itself present a number of challenges for REALTORS®. Some challenges are:

1. Limited experience
   Many REALTORS® are new to the short sales process; a difficulty which is compounded by many lenders' lack of sufficient and experienced staff to process short sales. Even if the REALTORS® are experienced, most servicers are under-staffed and still not adequately trained, making negotiating a short sale particularly difficult.
   
2. Absence of a uniform process and application
   Currently, both short-sales documents and processes are lender-specific, making it very difficult and time-consuming for REALTORS® to become knowledgeable and efficient in facilitating these transactions. 
   
3. Multiple lenders
   When more than one lender is involved, the negotiations are much more difficult. Second lien holders often hold up the transaction to exert the largest possible payment, in exchange for releasing their lien, even though in foreclosure they will get nothing.

As a result of these challenges Realtors have reported difficulties with: unresponsive lenders; lost documents that require multiple submissions, inaccurate or unrealistic home value assessments, and long processing delays, which cause buyers to walk away.

How can I help you as a REALTOR®?

The Realtors Buyer's Agent Council of The National Association of Realtors newly created a course that I have completed called Short Sales and Foreclosures. This course has provided me with the most up to date information on the Short Sales and Foreclosures. Sure agents as myself may have done these in the past but keeping up with all the new information and techniques to accomplish the sale of your home in this manner means more education than ever before.  Ask your listing agent if you are in this situation if they completed this course, if not why not, are they prepared to take on the challange of the Short Sale?