What a Short Sale Negotiator Does for the Seller
Even though the information on this web page is provided by a qualified industry expert, it should not be considered as legal, tax, financial or investment advice. Since every individual’s situation is unique, a qualified professional should be consulted before making financial decisions.
In this article, I’m going to explain in detail what kind of help with a short sale a seller of real property can expect from a short sale processing company before and during the transaction.
I will share with you my insider knowledge and experience that I acquired during the years managing my own short sale processing company.
Now, let’s start with the basics.
Who Is a Short Sale Negotiator or Processor?
Definition
A processor or negotiator in a short sale is a company that facilitates the short sale process for the seller.
Not only do they help homeowners get approvals to sell a home for less than the outstanding mortgage balance, but they also coordinate the whole process from start to finish.
Meaning
Facilitating a short sale transaction includes, but is not limited to:
- acting as the authorized third-party representative for the borrower
- helping the homeowner complete the request for a mortgage assistance package
- passing financial and hardship information back and forth
- handling the direct communication with the lender
- coordinating the third-party appraisal between the listing agent and appraiser
- exercising follow-up systems to ensure the bank is held accountable to its estimated timelines.
Here is a common example of when a short sale processor would be hired:
Ted purchased his house in 2017 and has recently fallen on hard times. His current hardship has resulted in three months of mortgage delinquency.
On top of that, his outstanding mortgage balance exceeds the as-is market value of his home. Ted wants to do a short sale, but lacks the expert knowledge and time that is required to complete the process.
After doing research, he determines that hiring a short sale negotiation service company is the right move for his situation.
After speaking with them, Ted is confident the company will take care of the legwork and exercise their short sale agreement with the lender.
Is It the Same as a Short Sale Attorney?
This commonly asked question can be summed up quickly. No! A short sale processor should not be mistaken for a short sale attorney.
While in both cases the homeowner gets assistance in a short sale, an attorney and a processor offer different services, on different terms, and have different responsibilities.
A processing company specializes solely in short sales and is responsible for facilitating documentation and streamlining communication between the borrower and the lender.
An attorney is licensed to practice law in the state where the subject property is located.
Oftentimes, the lawyer is going to charge the seller a fee for their time spent on the case and focuses on negotiating down certain third-party debt or works on trying to get the foreclosure auction date postponed (if one is scheduled).
Let’s take a look at these two scenarios.
Scenario #1 depicts a situation where a seller may want to consider hiring an attorney. On the other hand, in Scenario #2, it may not be completely necessary.
Scenario #1:
James has decided at the last minute that the best decision for him and his family is to short sell their home, in order to avoid the looming foreclosure. The problem is that the foreclosure auction is scheduled just two weeks from now.
After some research, he realizes the time frame to conduct a short sale may be too tight. So, James contacts a short sale/foreclosure specialist law firm to get a quote on trying to postpone the upcoming foreclosure sale date.
Scenario #2:
Beth is behind on her monthly mortgage payments and has decided to list her property for sale as a short sale. Her real estate agent recommends a reputable short sale processing company to help move things along.
There is no foreclosure auction date scheduled, and Beth’s only outstanding debt against the property is her primary mortgage.
After speaking with the short sale processor, they recommend that Beth use an attorney if that’s what she is comfortable with. The company explains that they will work alongside the law office, sending them copies of all documentation throughout the process.
She decides that hiring an attorney, in this particular situation, is not worth the time/effort/money. Beth is confident the short sale can be completed via her short sale processing company and the listing agent.
What Does a Short Sale Negotiator Do for the Seller?
The role of a professional short sale process negotiator is to assume the responsibility for facilitating all short sale paperwork between the seller and their lender, along with acting as the main point of contact for them.
The homeowner signs and submits a third-party authorization form, which allows the certified short sale expeditor to obtain information on the loan and speak about it with the lender.
For example, some duties of the seller during a short sale include:
- filling out a request for mortgage assistance packages
- writing hardship letters
- waiting on hold to speak with a lender’s assigned representative to confirm receipt of documentation that was submitted, etc.
In short, a negotiator handles the whole short sale process that I previously described in my article: Step-by-Step Short Sale Process for Home Sellers.
And if you’ve already decided that you do need professional help, fill out this form to get in touch with a reputable short sale processor in your location who handles short sales at no charge to homeowners.
Do Short Sale Negotiators Charge Any Fees?
When considering hiring a short sale processing company, one of the important questions you should ask is: Does the company charge fees for its service? And more importantly, who pays for these fees?
The answer to this question will vary on a case-by-case basis.
Some short sale processing companies will have the buyer of the property pay the fee on the final HUD (settlement sheet). This should be a contract signed upfront, along with the offer.
Other short sale processing companies will charge the seller (you) the processing fee, either upfront or at closing.
Avoid any surprises by asking the processor upfront what your costs will be!
If you would like a professional short sale negotiator to assess your situation and handle your short sale at no cost to you, fill out this form right here.
How Long Does a Short Sale Take After a Negotiator Is Assigned?
Although a short sale is sometimes referred to as a “quick sale,” on average, it takes three to five months after a negotiator or processor is assigned to the file.
It is very important to note that this time frame can change on a case-by-case basis. A professionally negotiated short sale can take under the three months stated above.
Or, it can take longer than five months if your processor lacks experience or if there are other complications.
However, there are common factors that determine the duration of a short sale. Here are the main ones that can extend the timeline of the short sale process:
- Property is sitting stale on the market: many times, the short sale documentation is completed, but the listing agent is unable to get any offers on the home. A short sale cannot take place without a valid offer package submitted to the lender.
- Multiple mortgages against the home: a secondary mortgage against the property means that both lenders must agree to the short sale and specific terms that are being offered.
If a negotiation ensues (it often does) between the primary and secondary mortgage companies, this will add time to the process.
- Homeowners are slow getting documentation back and forth: if the homeowner has high lag times when passing documentation back and forth, this will push back the short sale approval date.
