Real Estate GroupReal Estate Group
(951) 318-6420 (Broker)
(877) 529-2480 (eFax)

Real Estate Group
3507 W Stetson Ave., Ste 141
Hemet, CA 92545
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Real estate for sale in southern California communities. Cheryl Gollnick, Real Estate Broker

Short Sales

If you have been served with a Notice of Default or Notice of Trustee Sale, call us, because your lender wants to approve your short sale. It is cheaper for them than having to foreclose on your property.

Since a short sale is completely different than a typical sale, we want sellers to be informed about short sales before we start the process with them. We want them to understand what a short sale is, the benefits to doing a short sale, the process, issues that sometimes arise when a seller is not informed beforehand, what the lender requires of them and the approval and closing process. 


It is a situation in which a homeowner must sell the home for less than what is owed on it.

In many areas of the country, distressed properties (short sales and foreclosures) comprise 30%-50% percent of the active listing market.  

In a short sale, the lender agrees to settle the mortgage debt owed by the homeowner for less than the amount owed as payment in full. 

A seller is not concerned with getting the most amount of money possible for the home because no matter how much it is, it will not be enough to both pay back the lender and walk away with any profit. Because the seller does not expect to get any proceeds from the sale, the seller’s motivation is simply to sell quickly, at a price the lender will agree to accept from the buyer, and not to sell at the top of the market.

The lender usually agrees to accept a payoff of the seller’s mortgage debt at between 70% - 80% of the value of the property, which is usually always lower than the value of other properties in the same area. This could be simply due to the fact that the property is in foreclosure and buyers pay less for these properties, the property has deferred maintenance that the new buyer will have to take care of or the property may need updating to bring it up to the value of other properties selling in good condition etc.


  • Homeowners pay Nothing & Receive Up To $10,000 Cash Paid By Their Lender At Closing To Help Them To Relocate
  • Homeowners Can Stay In Their Home For Up To 120 Days While We Negotiate The Short Sale With Their Lender
  • There Will Be No Sign In The Yard, No Lock Box On The Door And The Homeowner Will Not Have To Make Any Repairs
  • Upon Completion Of The Short Sale, The Mortgage Loans, Back Payments, Property Taxes And HOA or Other Liens Will Be Paid Off Or Settled In Full So The Homeowner Can Walk Away With A Clean Slate


A homeowner usually decides to call a real estate agent to help them "short sale" their property when they receive the "Notice of Default". If they wait too long, they will receive the "Notice Of Trustee Sale". This notice tells the homeowner that they have 21 days to cure their mortgage default with their lender or the home will be sold at public auction on the given date. 

Before the homeowner receives this notice, some owners try to do a loan modification with their lender to lower their mortgage rate and monthly payment or extend the loan or change the terms of the loan, including to ask the lender to include the loan arrears in the new loan. 

Unfortunately only about 5% of homeowners qualify for a loan modification and by the time the homeowner receives the letter from the lender letting them know they did not qualify for the loan modification, at the same time they realize they have ran out of time allowed to cure their foreclosure. 

This is why the homeowner should act quickly when they receive the "Notice of Default" from the lender. They need to let their lender know that they are willing to sell the house to cure their default, as opposed to the lender having to foreclose on them.


After a short sale, the seller's credit reports usually show that the debt was settled for less than the amount owed. This is a lot better than a foreclosure appearing on the credit reports.


To approve a short sale, the lender requires a homeowner to be in default (behind on their mortgage payments) or to prove to the lender that they will be going into default soon and for what reason or it could be simply because they need to sell but can't because they owe more than the property is worth.

The lender requires the homeowner to list their home for sale on the MLS (Multiple Listing Service) with a real estate agent because the lender knows this will get the property the best exposure and will help the owner to find a buyer quicker. The seller is not responsible to pay the agent’s commission. The lender or bank will pay the agent a commission of 5%-6% of the amount the buyer agrees to pay the bank at closing. The lender does this because it is in their best interest as well as the sellers to get the debt settled as soon as possible.

The lender will order an appraisal of the property value before they decide what they are willing to take to settle the seller’s debt to them.

The lender will issue a short sale approval letter and this will let all parties in the transaction know what amount the lender will accept as payment in full for the mortgage debt.


Sometimes when a seller receives the short sale approval from the lender and they see the low price the buyer is paying for the property they lose sight as to why they asked for help in the first place (to erase their debt and stress related to it) and they get angry. They assume the buyer will “make a killing on the profit they will make when they resell the property”.  This is not the case. For one thing, all the seller sees is the amount the buyer gave the bank. This could be a low number as previously stated (70%-80% of the as-is value of the property) but if you add up the total amount the buyer paid in all to settle the sellers debt, plus any liens the buyer had to pay off for the sellers, plus escrow and closing costs, homeowner property taxes, homeowners insurance, HOA (Homeowners Association) transfer and monthly fees, holding costs until the property is resold, rehab costs to update or repair the property, closing costs and commissions to resell the property, plus any other costs, usually the buyer will be lucky to make a profit of 12%-15% when all is said and done. This is not taking into account all the time and energy it will take the buyer to accomplish this.

We require that sellers we work with understand this and appreciate that we, the buyer and the lender is saving them from suffering a foreclosure on their record and they are relieving them from the bank coming back on them for the debt and reliving them from suffering any further stress due to the debt hanging over them.


We have cash buyers that place the property under contract within 2-5 days of our listing the property for sale. The status of the MLS listing will go from Active for sale to Pending Sale. This prevents the open marketing of the property to other "looky loo" buyers and having a lot of agents bringing in their prospective buyers to view the seller's home. Instead, we begin working with the lender to relieve the seller of the debt hanging over them.


It helps if the homeowner can give us the information on their principal loan balance (1st & 2nd loans) and the amounts owed for back payments on the loans, property taxes and HOA fees (if any). It would also help us to know the monthly payments and if the first loan includes taxes and insurance.

All this information can usually be found on the most current mortgage statement received from the lender, property tax bill, homeowners insurance company or any letters received from the Homeowners Association (if any) or attorneys who have contacted the homeowners regarding any liens against the property.

If homeowners don’t have this information it’s ok. They will sign an authorization form that we send to their lender giving the lender the authorization to give us all the information on the mortgage and to work with us on the homeowner's behalf to settle their debt. Any other lien information we will be aware of when we research the title to the property.


1.   How much time will I get to move out?

That depends on several things. First we meet with the sellers, list the property, find a buyer for the property, get the short sale package documents filled out and signed by the sellers and we send this package to the lender. This process usually takes about 2 weeks. The average number of days it takes to get the short sale approved by the lender is another 30 days. Add another 30 days to close escrow. This is a total of about 75 days if things go as planned. This is also the average number of days the homeowner will get to remain in the property after listing it for sale. This period gives the homeowner time to prepare to find a new place, to pack and to move.

Nothing will be a surprise to the homeowner. They will know when their lender has accepted their short sale package for processing, what the status is in between and when their short sale has been approved. At this point is when the homeowner will be notified that they have 30 days to close escrow and move, unless they agreed to move sooner.

What might shorten the time frame is when the lender approves the short sale within the first review period (which might shorten the time the homeowner can remain in the property to around 60 days) to a longer time frame if the lender is dealing with wait times for approvals from third parties and needs additional time for the approval (which might lengthen the time the homeowner can remain in the property to around 90 days). In rare instances, there may a lien holder that is difficult to work with to settle the lien amount and it could take longer. This is why we say it could be 60-120 days. The average is 75 days.

2.  How much cash does a seller receive to move?

It depends on how much the lender is willing to give the seller. Once we gather all the information and send it to the lender, they can give us an estimate of the amount of cash that the seller may receive at closing. It can be as little as $3000 to as much as $10,000 or it could be none if the lender does not approve any amount. The seller will not know the exact amount until they receive the lender’s short sale approval letter, which will state any amount the seller will receive at closing to help them move.

3.  Do some buyers let the seller stay in the property and lease it back after closing?

NO. In fact, in a short sale transaction, the lender does not allow this and the seller and buyer must sign a document before closing that they understand the lender will not allow this and if this happens, the lender can hold the seller and buyer liable for damages and subject to prosecution for fraud.

4.   What happens if the homeowner files for Bankruptcy?

A homeowner who is considering filing bankruptcy or who has already filed for bankruptcy should understand that this process only stalls a foreclosure sale (trustee sale). It does not eliminate foreclosure. Homeowners don't get to wipe out the mortgage debt and keep the property as the mortgage remains a lien against the property while all personal debt is erased. If a homeowner is in active bankruptcy, the lender usually always will not communicate with the homeowner or with us (on their behalf) until the bankruptcy has been dismissed or discharged. 

5.  What if the homeowner has paid an attorney to file a lawsuit against their lender to wipe out their mortgage debt or to postpone the trustee sale (same as foreclosure sale or auction sale)?

The homeowner needs to understand that this procedure is simply a stall tactic. In 99.9% of cases, filing a lawsuit against a lender only stalls a foreclosure sale. It does not eliminate it. What it does do is cost the homeowner usually thousands of dollars in attorney costs to keep postponing the trustee sale.

If a homeowner has an attorney who has already filed a lawsuit against their lender, the lender will not speak to the homeowner or us or start the short sale process until they have received a notice that the homeowner has contacted their attorney to drop the lawsuit against the lender. We can consult with the homeowner about the short sale process but can't start the process of listing the property etc. until the case against the lender has been withdrawn.


Homeowners may fill out the "Contact Us" form on the left panel or call us for help. Call Cheryl direct at (951) 318-6420.

Be prepared to answer a questionnaire over the phone about the circumstances that led up to the homeowner needing to do a short sale and property details, including what repairs or replacements the property needs and any cost estimates the homeowner has received.

We will also need to know if everyone on title to the property can be reached to sign documents related to the sale of the property.

CA BRE Lic. #01117664