Hawaii Short Sale |  Mililani Short Sale| Ewa Short Sale| Hawaii  Short Sale Process |Hawaii Home Buyers | Hawaii Home Sellers
Sally Cheeseman

Hawaii Short Sale

With there being some Hawaii Short Sales it may be in both the Hawaii Home Seller and the Hawaii Home Buyer's interest to be informed on both the process as well as the pros and cons of buying or selling a Hawaii Short Sale Property. 

A Short Sale is basically when the seller needs to sell and the proceeds will be insufficient to pay off the existing mortgage AND an alternative to foreclosure. The Lender must approve the reduced price of the property and the conditions of the offer in order for the sale to take place.

IMPORTANT NOTE:   The seller is responsible for all maintenance fees, association dues, property taxes and so forth. Keep up with your payments lest there be another lien on the property that will further complicate a short sale transaction.

 An Overview for the Seller - The Short Sale Package

All of the documentation needed to start a short sale is commonly called a "Short Sale Package" and will be submitted by the Realtor®, representing the seller of the property. The package includes (but not limited to) the following items and will be submitted once your property receives an offer:

  • Authorization to Release Information signed by Seller(s) and to be submitted to Lender beforehand to start communication
  • Cover Letter (prepared by the Seller’s Agent)
  • Sellers Hardship Letter (reasons why you are unable to pay your mortgage). Must include: date, name, account number, hardship (Unemployment, divorce, medical, death, payment increase, illness, job relocation, military service, incarceration etc.)
  • Supporting Hardship Info - HOA liens, property tax liens, medical/disability statements, copy of military orders,  etc.
  • Seller's Financial information:  2 years W2's, 2 months pay stubs, 2 months bank statements
  • Comparable sales for the property (Your Realtor® will prepare)
  • Purchase Contract and all Addendums
  • Seller’s Net Sheet for the Property (Estimated HUD-1 to be prepared by Escrow)

Other additional information that may be requested:

  • First mortgage holder may ask for a payoff amount from the 2nd
  • Second mortgage holder may ask for a payoff amount from the 1st
  • Lender may ask for an Initial Title Report
  • Repair Estimate for the property
  • Deficiency letter signed by the borrower
  • FHA and VA have forms and special requirements too

NOTE:  The borrower MUST have a current or eminent financial hardship and only the borrower's lender will take this into consideration. Also, it is up to the lender if they want to 'forgive' the deficient portion although you may still be responsible for that debt. Speak with your lender regarding your options!  MOST STATES do not have laws to MAKE the lender forgive any outstanding loan deficiency.

An Overview for the Buyer - Buying a Short Sale Property

  • A Short Sale MUST be approved by the lender. (The seller will also have to accept the offer before the short sale package is submitted)
  • The Lender most likely will request that the property be sold "As Is" and because of the sellers hardship they most likely will not approve any repairs or credits for repairs.
  • The Short Sale Process WILL take longer than a normal transaction due to the lengthy process for the lender approval FIRST before proceeding with the transaction. (i.e. approximately 30 days for an answer from the lender -sometimes longer and then the normal 45 +/- days for the transaction/loan process once there is lender approval.
  • There may be more than one offer due to the lower list price of the property (and condition) so as always...put in your best offer.
  • Have a Professional home inspection even though the lender may not approve any repairs or remedies. It is in your best interests to KNOW what may need future repairs.
  • Typically, lenders are trying to cut costs in every way they can so and with Short Sales they may not approve any buyer credits, home warranties, pest inspections, surveys and so forth. Buyer would take on these fees.
  • Properties in Associations with maintenance and association fees which may be in arrears (seller did not pay for months) may require the buyer pay all past due amounts.  Your REALTOR® will check on all.
  • Condominium/Association Documents needed for the purchase/loan may/may not be reimbursed by the bank and the buyer would need to order the documents.
  • Make sure you have a knowledgeable Realtor® who can explain the Short Sale Process and all that is typically involved in this type of transaction as well as to research and get all additional information with a short sale.

Disclaimer:  This information if for informational purposes only. Seek legal counsel to determine if buying or selling a short sale is in your best interests.