Arizona Short Sale Process Explained

The short sale of real estate is not a questionable practice in today's softening real estate market, it's a necessity. The short sale transaction is legal and a much more beneficial alternative to foreclosure or bankruptcy. Lenders are motivated to accept short sale offers for a number of good reasons. The short sale can result in a win-win-win situation for all parties:

Win #1 Owners: Owners win by getting out of a financial predicament, a clean transaction and a salvaged credit score. Your property is saved from foreclosure, thus helping you to save your credit rating. Allowing your home to proceed into foreclosure may adversely affect your credit for up to 7 years.

Win #2 Lenders: The lender wins by avoiding costly expenses of foreclosure proceedings which could lead to even more costly expenses of ownership of the real estate for the lender.

Win #3 Buyers: The buyer of your property wins by getting a solid property at a good market value, possibly with equity.

Short Sale, pre-foreclosure and Foreclosure properties are often considered a great deal for homebuyers and investors. Many properties are sold at Sheriff Sales & Trustee sales as foreclosure filings keep increasing at an alarming rate and across all economic levels. Current properties being auctioned off are nicer and nicer in overall condition. Any homebuyer considering purchasing a pre-foreclosure and/ or short sale property must be patient.

What is a short sale negotiation?
A short sale negotiation is started when you have a real estate purchase offer for your home that is lower than the total amount owed to all lenders for all loans and any & all lien holders. When the lender reviews the purchase offer to the mortgage holder they definitely try to recover as much as possible so they will usually counter offer. If the mortgage lender doesn't reject your short sale offer immediately, then the chances are they are interested and it is a matter of making the numbers right.

How is a short sale negotiation different from others?
A short sale negotiation is not much different from other types of negotiations, except you are dealing with a bank as the seller or final approver of the purchase.

What do I need to know in a short sale negotiation?
Besides being convincing in your argument and hardship, you need to know what makes the most sense for the bank. The mortgage holder wants to get the foreclosed property (bad debt) off their books and take as little over all loss as possible. It's very important for you to find out as much as possible about what their thresholds and points of interest are in the transaction.

For example: you may want to ask the bank if the mortgage short sale purchase offer is close to what they have in mind or way off. If you are thinking to far apart in terms of price then chances are you'll probably never be able to make your short sale work, no matter how good at negotiation you are. Try to verify with the bank as much as possible and if you can get any clues what they are looking to get out of the transaction. Knowing that information and what you are trying to achieve is the main key to a successful short sale.

Work with the bank
Communication is HIGHLY important to a successful short sale negotiation purchase. You want to find out what the bank needs to make your short sale deal work. You don't want to keep negotiating on a short sale if you don't know roughly what the bank is trying to get or you'll spend a lot of wasted time on a dead deal. Often, when you are talking to a bank officer about a real estate short sale, you can ask them if your short sale offer is close to what they can accept at all. If it is, then you know you can make a short sale case and keep moving forward.

Unfortunately, as part of the short sale agreement, the lender prohibits the Seller from receiving any "sales proceeds." In other words, sellers can not get any money for the sale of their house.

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