Can a Homeowner Short Sale Their Own House?

Updated on August 23, 2010
P.H. asks from Montgomery, IL
9 answers

I know someone whose house is in the process of foreclosure, would it be to her advantage to choose to have her house go into a short sale instead? Is that possible or is that the banks decision and how would she go about it? Thanks for any inoformation you can give me.

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answers from San Francisco on

She should seek the advice of an attorney. Depending on the type of loan, whether it was remodified, etc.... the answer is different. My friend needed to sell her house and her house was worth about 300,000 under what she paid. Because of her individual situation, the lawyer told her not to short sell but to let it go into foreclosure. The neighbor next to me, however, did a short sale. So have her trend carefully and make sure she speaks to experts in her area.



answers from New York on

Definitely consult an attorney before anything else. Do not take the advice of anyone, even a real estate agent (I am an agent myself) because short sales are complicated and delicate and INDIVIDUAL. Specific language should be in the listing and in the purchase and sale agreement, etc. Short sales are so common now, most attorneys have done them - but better still find an attorney who specializes in them and it will be a lot easier. More than half of my listings are short sales now. You can get the sale "pre-approved" so that when it is introduced to the market you are in a much better position. Buyers shy away from short sales that are not pre-approved because it can take over four months to get an answer from the bank as to whether or not they will accept their offers. Good luck. You are not alone.



answers from Phoenix on

I wouldnt reccomend it unless they have knowlege ob all the paperwork. The bank had to accept whatever offer that the buyer offers and all your ducks have to be in a row, so its not something I would mess around with unless your bank gives you the okay. They also need proof that you have it on the market so they postpone the froclosure process. I say talk to her bank and see if they will accept an offer with out a realestate agent involved, because in the end the bank has to be the one to accept the short sale, they can make or break any offer,


answers from Dallas on

We did a short sale on our home in 2007. We used a real estate agent that specialized in short sales due to the extensive process. I'm sorry but I would advise you to get an experienced-licensed agent to handle it. Due to our agent brought in clients locally and out-of-state; had to do an appraisal of the home to find its value, you have to fill out forms to prove you can't afford the home, there are negotiations with the bank, and the bank likes lookers to be prequalified, have ernest money etc. In the end our agent sold our house in two months (the bank turned down numerous people that were prequalified) which sold to a man who flew down from California to find a home for his mom in Texas; this man paid out right for the house. In the end we got money back (a few thousands) and the agent's commission came out of the house too(2500). It was a smooth quick process. More or less get an agent and hope that your bank is not picky. We had Wells Fargo. Good luck; I hope the process goes quickly for you.



answers from Houston on

I've never done it, but I listen to Dave Ramsey a lot and he discusses the topic pretty regularly. A homeowner with a mortgage doesn't really "own" anything but the equity they've built up in the house--the mortgage company owns the property as collateral for the loan.

If she has a mortgage, it must be agreed with the mortgage holder in advance and in writing. She will want to make sure the wording of the agreement doesn't hold her liable for any difference between the selling price and the is worth the few hundred dollars to have an attorney review this part.

It depends on the circumstance, mortgage holder, and real estate situation but she may have to prove that she has shown due diligence in trying to sell it (i.e. a certain number of months on the market, lookers but not buyers, etc.)



answers from Chicago on

Yes, you can. But the bank has to agree to the deal. In this market, more banks would prefer a short sale then a foreclosure where they will have to bear the burdent of reselling and maintaining a vacant home.

Short sales are tough. The buyers often have to wait for a long time for the deal to go through, and because of that, often do not close. But it is a better option for everyone involved, so if there is a way to get it done, you should try to make it happen.




answers from Boston on

A couple of years back we put our house for sale and did a "short sale" so it wouldn't go into foreclosure. It sold. Obviously the case may be different where you are saying your friends home is in the foreclosure process. I'd definitely have her consult a real estate agent who strictly deals w/ short sales. Through our agent we were able to incorporate her fees as well as the attorneys fees into the cost of the short sale. Best of luck.



answers from Denver on

If you're talented enough, you can make your own rocket that goes into outer space without being a rocket scientist. However, most people just don't have the time or inclination to do so.

A short sale, as you can see by the earlier question about short sales (read it), takes a LOT of patience and it takes someone who knows 1. *who* to talk to at the bank 2. What to say 3. How to phrase it (ie the house is truly worth less then the loan balance because of XYZ acceptable factors) 4. How to complete the paperwork 5. How to write up the hardship letter, etc.

So, IMHO, get a realtor who has a CDPE (Certified Distressed Property Expert) designation. Then wish her a lot of luck.



answers from Chicago on

I work for real estate attorneys and we have done short sales in the Chicagoland area for several years now, back to when the term was not part of everyday conversation. Yes it is a good idea to attempt, or at least look into, a short sale. The way the process goes, the homeowner puts the house up for sale, accepts an offer, and presents it to the bank. So there is somewhat more control on the homeowner's part. Additionally, once a foreclosure is completed that judgement will forever be on their name. In a short sale, it is completed like a private sale...the only difference is that the bank's payoff letter is for less than the full amount due to them. Finally, if the property goes to auction, a lot of times it is for less than it would have sold on the real estate market. Once the foreclosure is complete, the bank still has the right to chase the borrower on the unpaid amount of the note (but they don't always do that...but it is their right). So, essentially, there is a potential to have a larger amount chasing them post-closing.

First and foremost, I would recommend that your friend speak to an attorney specializing in short sales that can guide her through. A lot depends on where she is in the foreclosure stage and a well-versed attorney will be able to determine how much time is at play.

Above all, don't pay anyone anything up front. Attorneys and realtors get paid at closing. If you want our office's info feel free to message me back.

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