New Jersey is one of the most desirable places to live in the country, but finding a home that falls within your budget can be a real challenge. Many potential home buyers have turned to short sales as an option that holds attractions for both the buyer and the seller. The seller of a short sale property has generally fallen far behind on their mortgage payments and is facing the risk of bankruptcy or foreclosure. A short sale offers them the opportunity to avoid those consequences, and offers the buyer a chance to purchase a home for well below what its market value should be. But the process can be complicated and arduous. If you are considering a short sale process in New Jersey from either side of the table, it is a good idea to have an experienced attorney representing your interests and guiding you through the steps.

The essential thing about a short sale that you need to understand is that the owner of the home has proven unable to pay the bank what they owe them, and they are trying to negotiate a deal in which the bank will accept less than what they are owed in order to satisfy the debt and/or stop a foreclosure from happening. This means that unlike a normal sale, there needs to be agreement from the home’s owner and from the bank – and even when it looks like this is going to happen, it can suddenly fall through.

The short sale process starts with a homeowner/seller that is facing a hardship such as bankruptcy, job loss or reduced income, a medical emergency or a divorce. They will propose a short sale to their lender by preparing a financial package according to the lender’s guidelines. This package will usually include a statement of hardship, a letter of authorization allowing the seller’s agent to speak to the bank, a financial statement, a preliminary closing letter, 2 years of tax returns, bank statements and W-2s, 30 days of payroll stubs, and an analysis of comparable home sales.

The seller then needs to wait for a response from the bank, and this can take a very long time. A buyer who truly wants the short sale home may need to be extremely patient. Once the bank has acknowledged receipt of the package, they will assign it to a negotiator and order a broker price opinion, or BPO, on the property. The file is then reviewed and the bank may require the signature of certain forms. Once this is accomplished and if all goes well, the bank will issue a short sale approval letter. Only then can the transaction be complete.

As you can see, whether you are a seller hoping to be able to avoid foreclosure or a buyer hoping to purchase a home at a bargain price, the New Jersey short sale process can be very frustrating. The best way to prepare for it is to work with an experienced attorney from Reinherz Law who can make sure that all of your paperwork is in order and provide you with a clear expectation and guidance.