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Miller, Marshall, Roth , P.C.

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Lyman J. (Greg) Gregory, III



90 Southside Avenue,

Ste 100

Asheville, NC 28801

90 Southside Avenue Suite 100


90 Southside Avenue Suite 100

A Legal Moment

Listing Short Sale Properties


        Because my newsletter on short sale contracts generated a lot of interest, I am writing a follow-up on how to list short sale properties.  While short sale approvals often occur after getting a property under contract, you will likely have more sucess in closing if you go through the short sale approval process at the time of listing.

        First, you must find out if your client meets basic eligibility requirements.  Short sales are only available to relieve verifiable financial distress such as a lost job, income reduction, or high medical expenses.  In addition, you should determine if your client has already worked with the lender on a loan modification or other required alternative to a short sale.  For many loans, an attempted modification is necessary before moving on to a short sale.  However, a borrower can often skip the modification attempt and go straight to a short sale  merely by requesting a short sale.

        Second, before approaching the lender, make sure your client meets the requirements that appear in many short sale programs.  Among the most common requirements are the following: (1) the property is the borrower's principal residence, (2) the loan closed before January 1, 2009, (3) the borrower is delinquent in payments, and (4) the value of the property is less than the loan amount.  Your expertise in rendering a broker price opinion will be very helpful on the last item, although the lender must rely only on its own appraisal.

        Third, your client must find out the lender's  specific short sale requirements and go through the process of entering into a short sale agreement.  The requirements will vary depending on several variables such as the type of loan, the loan servicer, the loan owner, and the loan guarantor (e.g. FHA, Fannie Mae, Freddie Mac), if any.

        Fourth, you can anticipate many of the terms that the lender will require in the listing agreement and sales contract.  Frequent terms include the following: (1) the marketing period must be a minimum of 120 days, (2) the real estate commission cannot exceed 6%, (3) the listing agreement and sales contract must contain cancellation and contingency clauses supplied  by the lender, (4) the lender will set the listing and/or acceptable sales price, and (5) the sales contract must restrict the purchaser from selling the property again within 90 days of the short sale closing.

        If you want more complete information on how lenders process and approve short sales, you can find helpful information and links to different program requirements on the website of the Department of Housing and Urban Development at:

 Preforeclosure Sale F.A.Q.



Do not hesitate to contact me to receive more information on this topic or to suggest topics for future editions of 'A Legal Moment'. You may not rely on this content as legal advice for any specific situation, but should instead contact an attorney for specific advice.

Miller, Marshall, Roth , P.C. • 90 Southside Avenue Suite 100 • Asheville, NC 28801
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