Distressed Property Sales
Short Sales & Foreclosures

Many areas of the country are seeing huge numbers of homes being foreclosed on or sold as a "Short Sale."  Fortunately, Park City has not seen large numbers of these types of sales ... but, there are distressed properties that are either bank-owned or where the owner needs to sell before being foreclosed on.

If you find yourself needing to sell your Park City area property in a short sale or want to find a distressed Park City property, we're here to help.  We understand the Park City and surrounding area markets, can answer your questions quickly, will listen to your needs, and make the purchase or sale of a property as easy as possible.

We've built this page to help you understand the Sort Sale process.  It can be a complicated and long process ... but, in the end can be a great deal for buyers & investors.  And, help sellers remove the burden of a property they can no longer afford.

The term "Short Sale" is used in the real estate business to describe a situation where there is more debt owning against a property than the property is worth.  In other words, the owner can't sell the property unless the creditors ("Third Parties") agree to accept a payment that is less (i.e. "Short") than the amounts actually owed those Third Parties.  The Third Parties are usually mortgage lenders, mortgage insurers, bankruptcy trustees, and federal/state/local taxing authorities (such as the IRS or State Tax Commission).

No Binding Contract Without Third Party Approval.  A Short Sale requires the written approval of the Third Parties.  That means that even if the the owner of the property and any interested buyer reach agreement between themselves for the purchase and sale of the property, the agreement will not be binding until the Third Parties approve the terms of the Short Sale.

Third Party Rejection Or Changes To A Proposed Short Sale.  Based upon the obvious financial loss, Third Parties will often reject a Short Sale.  If the Third Parties don't reject the proposed Short Sale, they will usualy send the owner a list of requested changes to the proposed purchase contract.  Some of those changes will affect the owner and others may affect the buyer.  For example, the Third Parties may require that the property is sold in "As-Is" condition.  The Third Parties will normally not permit the owner to pay for any of the buyer's closing costs, repairs, etc.  The owner and the buyer are not obligated to accept any of the changes requested by the Third Party ... but, then there would be no Short Sale.  If the owner, buyer, and Third Parties reach written agreement with each other then the Short Sale transaction may proceed to closing.

Delays In Response From The Third Parties.  Most purchase contracts for Short Sales impose a deadline for written approval by the Third Parties.  As a practical matter, the Third Parties rarely meed that deadline.  The owner and any interested buyer should be prepared for significant delays in receiving any response from the third parties.  Every situation is different, but closing on a short sale can be a 90 to 120 day (or longer) process.

Right Of Third Parties To Encourage Additional Offers.  As a condition of considering any proposed Short Sale, the Third Parties will usually require that the owner keep the property on the market ... even after the owner and an interested buyer have agreed to the terms of a proposed purchase contract.  Why is this?  The Third Parties are being requested to accept payment that is less than what is owed to them and they want to obtain the highest possible price for the property.  Therefore, it is to their advantage to require the owner to keepy the poperty on the market and require the owner to submit to them any additional purchase offers that the owner may recieve from interested buyers.

Right Of The Buyer To Cancel.  Because the Third Parties require the owner to continue to market the property --until the owner, buyer, and the Third Parties reach a written agreement, the interested buyer may cancel the proposed Short Sale transaction for any reason (or no reason) by providing written notice to the Seller. 

Every short sale is different because every Third Party to which the seller is obligated in the Short Sale has a different processes and document requirements.  But, generally, the Short Sale process can be divided into 5 stages.

Stage 1 -- Seller Preperation.  This is actually one of the most critical stages for a successful short sale.  This is where the seller lists the property and puts together the documentation that will accompany the short sale offer to the Third Party. If not done correctly, it will severly limit chances for a successful outcome of a short sale ... And, why you need a Realtor who understands the short sale process to help you through it.

• The Letter of Authorization allows the us to talk directly with the Third Party.  This is critical so we can determine the Third Parties required documentation and help you put together the short sale package.
• Homeowner Financials essentially give a snapshot of where you're at financially and provides documentation on why you can no longer afford the burden of the mortgage payment.
• A Hardship Letter is a handwritten letter that you'll provide to the bank explaining your situation.  It allows you to give a personal account of what brought you to this point.  We'll be there to help you put it together so it reflects your life situation.  This letter can be very influential in helping the Third Party to accept a proposed Short Sale.
• Comparitive Market Analysis (CMA).  We go beyond a normal CMA which just includes what has sold in the area surrounding your property.  We also try to find out what other properties in the local area has the third party agreed to a short sale on.  We try to documment the condition of the properties that sold in comparison to yours.  We'll take lots of photos.  And, you'll want to have professional repair estimates for any work needing done.  All this is important in helping the third party understand the true market value of your property.

Stage 2 -- Proposed Short Sale Contract.  This is here an offer is made to the seller.  In Utah, this will always includea "Third Party" addendum ... which basically says that any deal is dependent upon Third Party approval. 

If we're working with you as a buyer, we will have done our own comparitieve analysis of the house and the area, will look at what is owned on the property, and will help you estimate what a lender might accept.  It costs money for the Third Parties to foreclose on the property and they have to carry the property until they can sell it.  So, they are generally willing to sell the property for less than is owed if it costs them less than foreclosure/resale process.  With our analysis we try to estimate what that price point is -- so, you can get a great deal.

For sellers, we'll do a similar analysis for you.  So, when you recieve an offer, you can decide if it meets your criteria for submission to the third parties.

Stage 3 -- Packaging The Deal.  This is where the offer is packaged and submitted to the third parties.  Every third party has a different way of processing short sales.  And, if the package is not presented with all the documentation they require and if it isn't in the order they required ... it will delay the process or even cause the third party not to respond.  If you are a buyer working with us, we always ask the seller's agent to involve us in this process -- because if they don't package it and present it to the third parties right ... the deal won't get done.

• Inspection and Repair Report.  This document details the results of a professional inspection of the property and the estimates for any repairs required.  The Third Party gets an analysis of the property's issues and what it would cost if they took the property over and had to make the repairs.
• HUD.  We put together a statement that shows the third parties what the bottom line is they will net from the accepting deal.  This is a critical document that needs to be done right to justify the short sale.
• Cover Letter and Request.  This is what it says ... A cover letter requesting the third party consider the request for the short sale.  You need to make sure it is done right and includes a synopsis of the information pertenant to their decision to accept the proposed short sale.

Stage 4 -- Third Party Analysis Of The Package.  This is where the third party will consider our submission of the proposed short sale.  If they've been given all the right documentation and justification, this can be an easy process.  If all the previous steps aren't done right, it can be a disaster.  As part of the process, the third party will do it's own analysis of the properties market value.  This will include sending out their own appraiser to do that assessment.  We always try to be there for that anlysis so we can help the appraiser see how we arrived at our valuation ... they are generally not area experts and not helping them understand can cause problems if they overvalue the property.

Stage 5 -- Closing.  This is where you finally sign the deal.  If you're in the area, we make it a point to attend the closing with you.  We want to help you make sure all the other parties have done their work correctly and the deal is done.

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