by Sherry Ryals, Escrow Closer for Kings River Title

There is a lot more work involved in getting a transaction to the closing table today than at any other time in history. This is even more true now that the words “short sale” have become part of our daily vocabulary.  It is a time consuming ordeal for the seller and their real estate professional to convince the seller’s lender to accept a payoff that is substantially less than what is owed.  However, considering that a vast number of homeowners owe more than what their homes are currently worth, mortgage lenders often would rather accept a lesser payoff from a short sale and write off the shortage rather than risk a potentially greater loss after foreclosure. Thus, the lender gives ”short sale” approval to their borrower, who can now sell the property for less than the amount the lender is owed.  This process can also be very frustrating for a buyer because they often have to wait several months just to find out if the seller’s lender will approve the short sale offer. 

Once the lender has approved the short sale and has accepted the terms of the sale in the executed real estate contract, the lender will send very detailed closing instructions to the closing agent at the title company.  It is imperative that the closing agent and title company you choose to handle the closing be experience in closing short sale transactions.  Failure to follow and meet the conditions set out in the closing instructions can result in the seller’s lender failing to release its mortgage, the buyer’s lender not being appropriately secured and the seller liable to both the lender and the buyer.

An example of a closing condition that many short sale lenders include in their closing instructions are deed restrictions.  These restrictions can potentially prohibit a subsequent sale of the property for up to 6 months and/or the profit that the seller can realize during that period.  Another condition that is almost universal is that the seller in a short sale must not receive any proceeds from the sale.

Given the challenges associated with short sale closings, it is important to have a closer that is experienced closing these transactions.  In order to meet the needs of my customers in this economic environment, I have made it a point of emphasis to be knowledgeable in the details of these short sale transactions so that I can make sure the property closes quickly, and most importantly, correctly. Even though these closings can be very challenging, I personally find it rewarding to save a seller from foreclosure and help the buyer obtain the property, usually at a good price.  I look forward to assisting you and your customers with your next closing, even short sales, so give me a call or email me today at 479-442-6400 or sherry@kingsrivertitle.com