Got Questions?
We Have Answers.
Everything you need to know about working with Loan Mitigation Services to close more short sales with confidence.
Jump to Your Questions
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.
For Sellers
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."
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.
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.
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.
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).
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.
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.
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 thanking you now. :)
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-qaDoes 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.
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.
What are the legal and tax ramifications?
We always recommend that you consult with a tax attorney or CPA for this advice. However, from our experience, there are debt forgiveness provisions in place that may help you in your situation. Please see the link above for more information.
For Listing Agents
[PLEASE READ]
The LMS team are licensed real estate professionals and Certified Distressed Property Experts (CDPE). 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.
What does LMS do for Listing Agents?
LMS handles 100% of the short sale processing for listing agents. We manage all lender communications, paperwork, approvals, and coordination so you can focus on what you do best - getting listings and serving clients.
What are the costs for Listing Agents?
There are NO costs for listing agents. Our service is completely free to listing agents. We get paid by the lender or buyer, never by the listing agent or seller.
Will I still receive my full commission?
Yes! You will receive your full agreed-upon commission. The lender pays all commissions and closing costs in a short sale transaction. Your commission is protected throughout the entire process.
How long does the short sale process take?
Most short sales take approximately 90 days to process and close. However, this can vary depending on the lender, property condition, and specific circumstances of each case.
What is required from the Listing Agent?
Very little! You simply need to list the property on MLS and coordinate showings. We handle all the paperwork, lender communications, and approval process. You focus on marketing and we handle the rest.
What makes LMS different from other short sale companies?
We have over 20 years of experience, 700+ successful closings, and a 98% success rate. Our team includes licensed real estate professionals and legal experts who understand both sides of the transaction.
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.
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.
What listing documents, typically, are required by the Lender?
Obviously, there are many documents requested by Lenders in short-sale transactions. 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.
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!
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 10 . . . 30 days on-market before allowing an offer to be under review. 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.
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 appreciate title companies offering processing as a service to "get the closing", they are good at title, not Lender negotiation. At the end of the day, we are putting a real estate professional and legal team brings their real estate experience to every file. The LMS team has successfully CLOSED several-hundred short-sale transactions.
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 quit and get very 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!
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.
For Buyers & Buyer's Agents
What should buyers expect when purchasing a short sale?
Buyers should expect a longer timeline (approximately 90 days) and understand that the lender must approve the sale price. However, short sales often provide excellent value and the property is sold "as-is" with no required repairs.
Can buyers negotiate the price on a short sale?
Yes, buyers can submit offers below the asking price. However, the final decision rests with the lender who must approve the sale. We work to present the strongest possible case for approval of your offer.
What are the risks for buyers in a short sale?
The main risk is the extended timeline and the possibility that the lender may not approve the sale. However, with our 98% success rate and experienced team, we minimize these risks and keep all parties informed throughout the process.
How does LMS help buyer's agents?
We provide regular updates on the approval process, handle all lender communications, and ensure your buyer's offer is presented in the best possible light. We protect your commission and make the process as smooth as possible.
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.
Who pays the Buyer-Agent's commission?
Historically and generally, Lenders have paid ALL commissions. However, 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 commission agreements. In short, it is assumed 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.
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.
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)
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 a "Construction 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 see every effort to see that the Lender receives your supporting documents/opinions.
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 for the property. Next, 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.
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.