Frequently Asked Questions
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Owe: $375,000
Sold to Buyer: $325,000
"Lender Approved!"
Q: What is a Short-Sale?
A short-sale is an "On-Market" transaction, in which a Lender approves a homeowner to sell their home to an able and willing buyer for less than what is owed on the mortgage, typically forgiving the debt remaining.
Sellers
Q: What is a typical short-sale situation?
Typically, a homeowner is dealing with some form of "hardship", which has/is/will prevent them from paying their mortgage. Further, and in most cases, the home is now worth less than what is owed to the Lender, thus making the home "underwater."
Q: What out-of-pocket expenses will a Seller have in a Short-Sale?
In most cases, a Seller will have NO out-of-pocket expenses in a short-sale transaction. Sellers are not required to fix up the home and the Lender will pay for all closing costs and commissions for Seller's behalf.
Q: How does LMS get paid for professionally processing a Seller's short-sale?
In most cases, LMS will request the Lender pay for the LMS processing fee. In other cases, the Buyer is responsible, BUT NEVER the Seller nor their Listing Agent.
Q: What if a Seller's home has equity?
If a Seller's home has equity, they may be better suited selling on the open-market, so then can realize said equity. Typically, in a short-sale transaction, Sellers are not allowed to collect proceeds from a sale, so any equity in a short-sale transaction will go to the Lender.
Q: Will the Lender allow a Seller to Short-Sale their property?
Most Lenders will in fact allow for a "workout:, ie a Short-Sale. Lenders, in most cases, actually prevent further expenses on their end by performing a short-sale, so they save themselves against further loss.
Q: How long does a Short-Sale take to process?
Most short-sales, typically, take roughly 90 days to process. However, it may be less or even longer depending on the situation. Every short-sale is case-by-case. All said, patience is important, as short-sales can be complicated to process, so we are thank ing you now. :)
Q: What is the general rule for Debt Forgiveness?
Please click and read link below. Per National Association of Realtors . . . "the Further Consolidated Appropriations Act of 2021 extended the exclusion, with some changes, through December 31, 2025."
https://www.nar.realtor/mortgage-debt-cancellation-relief/mortgage-debt-cancellation-relief-qa
Q: Is there Relocation Assistance monies available for Sellers?
Yes, as a practice, LMS ALWAYS request this from ALL Lenders, but this does depend on the Lender(s) and the overall situation. Lenders may be willing to assist a homeowner up to $10,000 for Relocation Assistance and anything in between that and $0. HOWEVER, this is case-by-case and any assistance request MAY BE DENIED. Further, most Lenders require that the property is being used as a "personal" residence.
Q: How does a short-sale affect my credit score?
We ask that you seek the advice of a credit repair counselor/company for this advice, but there is an overall understanding that a Seller may be "mortgage-ready" again in two-to-three years (2 to 3) with credit repair efforts; unlike a foreclosure or bankruptcy, which damages your credit for seven-to-ten years ( 7 to 10).
Q: Does my property need to be listed with a Real Estate Agent?
Yes, in most cases, Lenders want to know the highest-and-best offer is being presented to them for their review, so placing the subject-property on the open-market is an important detail to attract the best offer possible.
Q: What if I don't have a Real Estate Agent to list my property "For Sale?"
You are in good hands, as our team is licensed real estate agents and CDPE (Certified Distressed Property Experts). IF you do not have a real estate agent, then please let us know and we will connect/refer you with a listing agent who is knowledgeable in the short-sale space. This is a specialty type listing and attention to detail is super important for the file's success, so knowledge is key
Q: What are the legal and tax ramifications?
LMS cannot legally answer this for Sellers. The LMS team are NOT attorneys nor certified public accountants. LMS encourages any and all potential short-sale sellers to consult with any professionals in these specific areas in regards to any specific questions.
Listing Agents
[PLEASE READ]
The LMS team are licensed real estate professionals and Certified Distressed Property Experts (CDPE) in the State of Florida. Currently, LMS performs ONLY in the State of Florida, so we can only speak to Florida specific listings/files. We encourage all real estate professionals, in any state, to seek the advice of their Broker with respect to any LMS suggestions below. The below should be viewed as a guide, only. Further, please refer to the other FAQs sections for more information, if needed.
Q: Who deals with the Lender?
Once retained by either the Listing Agent or the Seller, LMS will contact the Lender and will be the ONLY point-of-contact with respect to Lender communications and document facilitation. Any request to or from the Lender will be facilitated through LMS.
Q: What MLS listing requirements are needed?
Obviously, every state is different, but here in FLORIDA, the "Sales Provision" should be specific to "Short Sale." Further, the "Public Remarks" should make it very apparent this is a "SHORT SALE" transaction. As an example: many listing agents begin the public remarks with "Short Sale." Then, they provide a description of the property after.
In the Public and/or Private/Realtor Remarks it is encouraged to inform any potential buyers and/or buyer's agents that all offers "are subject to third-party approval." Even if the offer is really low, the Lender will decide what THE acceptable offer amount is as a final purchase-price.
Q: What listing documents, typically, are required by the Lender?
Obviously, there are many documents requested by Lenders in short-sale transactions, but for starters: 1). Listing Agreement; and 2). Short-Sale Addendum to Listing Agreement; and 3). Copy of the MLS Sheet (synopsis); and 4). As-Is Purchase and Sale contract; and 5). Short-Sale Addendum to As-Is contract. (document titles can vary from state-to-state). Again, there are many other documents, but LMS will facilitate those.
Q: How does LMS get paid for professionally processing a Seller's short-sale?
In most cases, LMS will request the Lender pay for the LMS processing fee. In other cases, the Buyer is responsible, but for the Seller and the Listing Agent, our processing fee is FREE! .
Q: Should the Listing Agent accept backup offers?
LMS encourages Listing Agents to accept backup offers and here's why: at the end of the day, a "foreclosure-clock" is ticking and the longer time goes on, the Seller is threatened with a judgement/foreclosure and possibly the threat of a Sheriff's eviction. That said, if the previous offer does not workout and the buyer(s) are unwilling to purchase, then it's best for there to be a second buyer ready to go, so we don't lose time. Make sense? So, the short-answer is YES!
Q: How long must I list the property as ACTIVE before accepting an offer and going PENDING?
This is a very good question, as most Lenders are case-by-case. With some Lenders, there is NO requirement, so offers can be accepted right away. Other Lenders will require 7, 10 . . . 30 days on-market before allowing an offer to be under review. That said, this is something LMS will be able to identify for your specific listing. That said, it is not the responsibility of LMS to monitor such timeframes, so we trust all parties are using their best judgement/practices when submitting offer.
Q: I've always just had a title company do my short-sales. Why LMS?
LMS specializes as a PROFESSIONAL short-sale processing company. There are levels in every industry and we pride ourselves at performing at the very highest with a NEVER-QUIT-ATTITUDE. Although we can appreciate title companies offering the short-sale processing as a service to "get the closing", they are good at title, not Lender negotiating. At the end of the day, we are putting a real estate deal together and the LMS team brings their real estate experience to every file. The LMS team has successfully CLOSED several-hundred short-sale transactions.
Q: What is the average close-rate for short-sale transactions?
Short-sales can be very complicated files to navigate, as many get very discouraged with Lender phone calls and requests. thus know when and how to zig and zag is super important for the success of a listing. Currently, only 55% (approx.) of short-sales transactions only get closed. This is due to the ignorance in the space. LMS has an 85% close rate!
Q: When does LMS get paid?
We DO NOT get paid unless your listing gets APPROVED & CLOSED! We are an incentive-based company, so our never-quit attitude has an 85% Approval/Close rate. As for the other 15%, unfortunately, some matters are out of our control.
Buyers / Agents
Please refer to the other FAQs sections for more information, if needed.
Q: We signed a contract with the Seller, now what?
That's great! This is the first step, HOWEVER, all offers are subject to third-party-approval . . . in other words, the Lender will, ultimately, need to approve the final price and closing.
Q: Who pays the Buyer-Agent's commission?
Historically and generally, Lenders have paid ALL commissions, but with the new rules in the real estate industry, we leave this to the agents working the transaction. Even though the LMS team are licensed, real-estate professionals, we cannot advise on how you and your Buyer structure your real estate and/or commission agreements. LMS assumes this is handled and structured prior to submitting any and all offers. If you need assistance, once again, please seek the counsel of your Broker.
Q: How long does a short-sale transaction take to process/close?
The average short-sale transaction takes 90 days to close, so any and all Buyers must be aware of this and be patient and committed to the process. There are many documents that MUST be satisfied for the Lender to review before any sale can be final.
Q: What Buyer documents, typically, are required by the Lender?
Obviously, there are many documents requested by Lenders in short-sale transactions, but for starters: 1). As-Is Purchase and Sale contract; and 2). Short-Sale Addendum to As-Is contract; and 3). Proof of Funds (last 30 days); and 4). AOI: Articles of Incorporation (if purchasing as a corporate entity). . Again, there are many other documents, but LMS will facilitate those. (document titles can vary from state-to-state)
Q: The property has a lot of damage. Can we send any supporting documents?
Absolutely. In some situations, offers may look like a low-balls to the Lender because it's much lower than market-value, but if the property needs a lot of repairs, then it is encouraged to show the Lender the situation. Keep in mind, the Lender is an institution and they can only see the property on paper, so if you have any "Contractor-Bids" or "Inspection Reports" to support your offer amount, then great. LMS cannot provide any opinion or advise on your offer amount, BUT LMS will be sure to use every effort to see that the Lender receives your supporting documents/opinions.
Q: Will the Lender accept our offer?
This depends. Once LMS has provided the Lender with a complete package, then they will order a BPO: Broker's Price Opinion to determine if the Buyer offer is acceptable or not. The Lender will hire an independent, third-party, real -estate professional to provide the Lender with a market-value to review and match up against the offer. After the Lender's review, they will either APPROVE or DENY the offer amount. But, in most cases, the Lender will provide the Buyer with an acceptable offer amount and then the Buyer will have the option to increase their offer.
Q: How fast can we close?
Once the transaction's terms have been agreed upon, the Lender will provide what is. called an "APPROVAL LETTER." This document details the terms of the deal and the expected close date, which is typically 30-45 days from date of said document.
Contact Us
Loan Mitigation Services, LLC
151 Southhall Lane Ste 230
Maitland, FL 32751
[email protected]
+1 407-250-1942