What is a Short Sale?
|
What is a Short Sale?
|
|
Mort.Calculator
|
What is a Short Sale??? Information for Buyers and Sellers. There are many ways to lose a home but signing away ownership in a manner that destroys credit and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale." When lenders agree to do a short sale it means the lender is accepting less than the total amount due. Not all lenders will accept short sales especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for a short sale. Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.
It is a long process so try to be patient and do the best you can to get the banks the information they request as quickly as possible. Now, if everything goes well, the lender will approve your short sale!
Buyers pursue short sales to get a
good deal. So when you see a price listed for a home that you think is too low
for the neighborhood, before you jump on that price like hot fudge on a
sundae, you may want to find out if the home is a short sale.
You should make sure you understand what could come up if you make an offer on a pre-foreclosure, short sale home. It's not simple and be aware that very few can close in 30-60 days. A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.
Make your offer contingent upon
the lender's acceptance. Give the lender a time frame in which to respond,
possibly up to one week, after which, you will be free to cancel. If the
lender is under no pressure to make a decision, the paperwork will sit on
a desk.
In addition, the lender will want to see that you have your own loan available and you are pre-approved. You will need a pre-approval letter to submit with an offer.
Generally, the lender will not pay
for customary items that a seller would pay. These include home protection
plans for the buyer, buyer credits of any kind and pest / termite
inspections. A buyer will be asked to purchase the property "as
is," which means no repairs. You still have the right to do a home
inspection but it may be at your expense to have water turned on,
de-winterize and re-winterize a property, have utilities turned on and
possibly even pay for repair/replace smoke detectors and carbon monoxide
detectors for certification.
If you do have a home inspection remember that you may not be able to negotiate like you would with an average seller. The seller usually doesn't have the funds available to do repairs and the banks do not usually give credits.
Once the seller has accepted your
offer, you will go to purchase and sale and that will be sent to the
lender for approval. You do not have a deal until the lender accepts.
Also, the lender will receive a copy of your earnest money deposit. Do
not be astonished if the lender asks you to increase it.
Short sale approval is normally a long process taking anywhere from 30 days to over 4 months. Sometimes the property is foreclosed before a short sale decision is reached. You may want to find out if there is more than one bank involved as well because if there are two banks you will need both banks to approve the short sale before it could close. I hope this information is helpful. If you do decide to put an offer on a short sale property I hope that it goes well and you are able to get a great buy! Please feel to contact me if you have any questions!
|
|
© 2006 Century 21 Real Estate LLC. CENTURY 21® is a registered trademark licensed to Century 21 Real Estate LLC. Equal Housing Opportunity. Each Office is Independently Owned and Operated. "When You're # 1, You Can Do Things Others Can't" - Source: 2006 Ad Tracking Study. This survey included 1202 telephone interviews (via computer assisted program) with a national random sample of adults (ages 25-54) who have either bought or sold a home within the past two years or plan to purchase or sell a home within the next two years. Brand awareness questions are based on a sample size of 1202 respondents with a margin of error of +/- 2.4% at 90% confidence level. The study was conducted between March 6th-October 2nd, 206 by Millward Brown, a leading research organization. |
