Is A Short Sale In Atlanta Right For You?

  1. What is a short sale?
  2. Who qualifies for a short sale? (Or Should You Do A Short Sale?)
  3. Does it cost anything for a short sale?
  4. What Cities/Areas Will You Accept A Short Sale Listing?
  5. Can I guarantee a successful short sale?
  6. What if the bank rejects the short sale proposal as presented? Am I still obligated to sell the home to the buyer?
  7. The difference between a short sale listing and a bank owned (REO)?
  8. Will a short sale damage your credit?
  9. Tax implications of a short sale
  10. How can I get started with the short sale process?
  11. Brief overview of the short sale process

Q: What is a Short Sale

A:  The most simple definition is that a short sale is when the bank agrees to receive less than the payoff amount on the mortgage.  OR according to wikipedia: In real estate, a short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor.

Q: Who Qualifies For A Short Sale? (Should I do a Short Sale?)

A: Typically the bank will only consider the short sale if you can prove that you have had some sort of hardship.  Loss of income, job, loved ones, high medical bills all qualify in most cases.  Ultimately, your ability to prove to the bank that you cannot afford the home and that foreclosure is imminent. 

Should you do a short sale?  - If you are facing foreclosure then a short sale may be your only option to avoid foreclosure.  In almost all most cases a short sale is always better than a foreclosure.  If caught early on, other options such as loan modification are available.

Hardship Examples:
  • Loss of a job
  • Reduction in pay / overtime / loss of bonus
  • Medical bills
  • Divorce
  • Death of a spouse or loved one
  • Overwhelming Debt
  • Incarseration
  • Decrees to sell from a Divorce Preceeding
  • Relocation for a job
  • Loss of renter (case by case)

Q: Does it cost anything to do a short sale?

A: The bank typically pays all the fees associated with performing the short sale.  The seller cannot receive any proceeds from the sell, legally.  In some rare cases, such as with an FHA loan, the seller may be approved to receive up to $1,000.  

Q: What Cities/Areas Will You Accept A Short Sale Listing?

A: The Jarvis Team will typically accept all metro atlanta area listings including but not limited to Gwinnett, Forsyth, Barrow, Jackson, Fulton, Cobb and Henry Counties.  Cities such as Lawrenceville, Duluth, Marietta, Alpharetta, Roswell, Atlanta, Stockbridge, and Kennesaw are all cities where the Jarvis Team has current active listings.

Q: Can I guarantee a successful short sale?

A: No. No one can gaurantee a successful short sale, period.  Anyone who does should have their motives questioned.

The Jarvis Team can guarantee we will our hardest to complete a successful short sale.

Q: What if the bank rejects the short sale proposal as presented? Am I still obligated to sell the home to the buyer?

A. No. Under a traditional sale, you could be sued for specific performance if, as the seller, did not meet the terms of the contract. However, a short sale requires the approval of the contract by the bank. In the scenario where the bank rejects the packet, we would need to correct the items that caused the rejection and re-submit.

Q: The difference between a short sale listing and a bank owned (REO)?

A: It might be easier to try to describe the timeline:
Pre-foreclosure -- Short Sale -- Foreclosure Notice -- Auction -- Not Sold At Auction Goes Back to Bank -- REO (more commonly referred to as a foreclosure by the general public)

Basically, a short sale is a sale that occurs before the foreclosure date. An REO property is one where the bank has already foreclosed and is trying to sell it.

Q: Will a short sale damage your credit?

A: Yes.  From "Credit bureau reports are limited in how they represent foreclosures today, so it's generally not possible to tell from the credit report if a reported foreclosure is a short sale, deed in lieu of foreclosure, settled account, regular foreclosure, or some other variation. 

The FICO® score treats all of these descriptions that appear on credit reports as serious delinquencies, so they have an impact on the score similar to the impact from a charge off, tax lien or account included in bankruptcy."

How long will the deliquency remain?


Active positive information can remain indefinitely (if an account is closed that has been positive, then it will typically remain on your report for 10 years after the date the account is closed).


Collection Accounts:
A collection account remains for 7 years from the initial missed payment that led to the collection.


Public Records:

Chapter 7, 11 and 12 bankruptcies remain for 10 years from the date filed.

Completed Chapter 13 bankruptcies remain for 7 years from the date paid, and 10 years if not completed.

Tax liens remain for 7 years from the date filed if paid and remain indefinitely if not paid.

All judgments remain for 7 years from the date filed.




Inquiries remain for 2 years.

Credit Accounts:
Negative information remains for 7 years from the initial missed payment that led to the delinquency.

So if my credit score will still get hurt, why wouldn't I just declare bankruptcy?

"While both foreclosures and bankruptcies are considered very negative items by your FICO score, a foreclosure can be isolated to a single account (your mortgage account). Often, bankruptcies involve multiple accounts that are "not paid as agreed", so bankruptcies have the opportunity to be farther reaching than foreclosures. However, if you're unable to pay other credit obligations in addition to your mortgage, you may need to consider bankruptcy. Here's a post on the FICO Forums that lists some good resources regarding bankruptcies.

While the reality of losing your home to foreclosure is difficult, there is a real possibility that you can rebuild your credit in a relatively short amount of time. Keep in mind that a foreclosure is just one negative item on your credit file and as time passes, it's impact on your FICO score will lessen."

Q: Tax Implications of a Short Sale? (Will I have to pay taxes on the difference if I am forgiven?)

A:   Not for your primary residence:  See the mortgage forgiveness act.

Q: How can I get started with the short sale process?

A: If you are in the Atlanta Area, Call 770-374-4667 so the Jarvis Team can evaluate your situation.  If you are in the Charlotte NC Area Call Jonathan Osman at 704-684-1085.

Q: Brief overview of the short sale process

A: Special Thanks to Jonathan Osman for his Short Sale Tips on this one:

For Sellers

There are a few important distinctions between selling your home traditionally and selling your home through a short sale.

Your mortgage company is thoroughly involved in the selling process. The bank will review a whole host of documents and will need to agree to a short sale proposal. The proposal will consist of your hardship letter, proof of your hardship, a listing agreement, a sale agreement with a buyer, sample HUD-1, a CMA, and other requested documents.

As a result of their involvement, the home will need to be listed for sale "As-Is" with you not making any repairs requested as a result of the inspection. Also, any agreements must be submitted to the bank for approval. This takes time and so as a result, it may be a number of weeks before a short sale is approved.

If the home has both a first and second mortgage, both will need to be negotiated independently, which may further delay the process.

All commissions and attorney's fees are set by the bank upon agreement of the short sale and as a seller, you will not receive any proceeds from closing.

For Buyers

Purchasers looking for an opportunity to own a home below market value should look into short sales. However, there are a few things you must remember before you make an offer.

1. Be Patient. Short Sales Take Time!

Among the chief complaints I hear from Buyer’s Agents and Buyers is the amount of time required to get a response to their offer on a short sale. This comes from a general lack of understanding of the process that is occurring between the seller, the bank and their vendors. Here’s a summary

An offer comes in

  • The seller signs it
  • The agent compiles the offer with about a hundred pages of other documentation on the seller and sends it to the bank
  • A file is open with the bank
  • The file is processed in loss mitigation. If the file isn’t 100% complete, 9 times out of 10, it hits the trash. No call is made to the listing agent that there was a problem.
  • An appraisal is ordered if one hasn’t been done already.
  • BPO data is gathered
  • A negotiator is assigned
  • Negotiator reviews the file
  • Consults with the investor behind the loan (most people never knew that the bank wasn’t the final end-all to that mortgage process)
  • Sends a response to the agent

This entire process can take a few weeks or a few months. Most Loss Mitigation departments are handling tens of thousands of files and your negotiator may be handling 2,000 short sales personally.

On average, a short sale from offer to close takes 5 months.

4. The Listing Agent Doesn’t Know What The Bank Will Accept Unless an Offer Has Been Received Beforehand

In a normal real estate transaction, a seller will list a house for sale at a price that is acceptable for them. In a short sale, the bank / investor on the actual loan has the final say on the price and they don’t share what they will accept with the seller or their agent until an offer is received. This puts the listing agent in an awkward position and could result in a home being listed for sale below what the bank is willing to accept.


Again, Special Thanks to Jonathan Osman for laying the ground work for this page.