Frank Linares

I'm not an agent in Texas, but I do have some short sales experience as a Realtor in Maryland. I don't imagine there is much difference from state to state on how the process is handled. In fact, since the market here has tanked more than in Texas, you may not have many Realtors in Texas that are as familiar with the process of a short sale. But I'll do my best to explain how it works here. Keep in mind there may be some differences between Maryland and Texas, but I don't think it would be much, at least as what the agent has to do. As you probably know, a short sale is a transaction in which the seller's lender will recover less than what is owed. As such, any contract that is ratified between the buyer and the seller is subject to the lender's approval. The approval process, depending on the lender, may take as much as 3 or 4 months to complete. The lender will need to see a "short sale package" which includes the listing agreement, the contract of purchase, the seller's tax return and W-2's for most recent two years, last month of pay stubs, a couple of most recent bank statements, a financial worksheet detailing income and expenses, and a hardship letter explaining the situation. Once this is submitted to the lender, at some point a BPO (broker's price opinion) is ordered which is basically an opinion of the property's value in the current market. Once the approval process is completed, the lender may accept the offer or they may counter the offer. If the offer is countered, then the buyer has to decide if he/she will accept it or withdraw the offer. The reason a short sale is more attractive than having a foreclosure is that a foreclosue will affect your friend's credit for around 9-10 years, while a short sale will affect it for 2-3 years. Also, there is some evidence that a short sale property will sell form more money than a foreclosure and from that standpoint the lenders prefer a short sale instead of a foreclosure. - Thu Sep 4 2008, 12:11