 |
 |
 |
When a lender and a seller agree to release a mortgage for an amount less than what's owed on the property, it's called a short sale. For more information, simply contact me through my site or e-mail me. I'm glad to address any questions you have about real estate short sales. |
|
|
|
 |
Short Sales have been on the market for a couple years now. You may be familiar with them already, but I thought I'd pass along the answers to some frequently asked questions for you to keep on file or pass along to friends or family who might be looking to purchase Short Sale properties.
What is a Short Sale?
A homeowner is "short" when a borrower owes an amount on his property that is higher than current fair market value. A Short Sale occurs when a negotiation is entered into with the homeowner's mortgage company or companies to accept less than the full balance of the loan at closing. A buyer closes on the property and the property is "sold short."
How long does the typical Short Sale take from offer to close?
You should expect the purchase process to take a minimum of four months or more. Extensions are common and there is certainly a possibility that the process could take even much longer as each seller's situation varies. I have heard of some taking as much as nine months.
Should our offer come in well below asking price since it is a Short Sale?
The bank will only accept what is fair market value for the property. A common misconception is that the bank is so eager to sell that they will take any deal. This is not the case, and banks have been known to reject offers and allow prospective buyers to walk if the offer is not fair market value.
Are Short Sales the best deals on the market?
Often, Short Sales may appear to be the best deals on the market; however, this is not necessarily the rule, as some owners have sufficient equity to sell at fair market value.
Does it matter which bank is making the decision?
Some banking institutions have a longer approval period for Short Sale transactions than others. Local banks with a short decision-making chain tend to move more quickly than larger, national banks.
Can we negotiate directly with the bank?
No. A Short Sale transaction is between the buyer and seller. The seller is still the owner of record. Only the seller and those parties acting on their behalf can negotiate the deficiency with the bank.
Can sellers continue to take offers after they accept our offer?
Unless negotiated otherwise, yes, this is to be expected. It is very common for buyers to tire of the Short Sale process and walk away. Back-up offers are insurance for the sellers in this case.
Once we are under contract, what situations can arise that may prevent us from taking ownership?
The bank may reject your offer; the bank and seller may not come to terms with one another (i.e., the bank asks the seller to contribute money in order to close and they are not willing to do so, the bank will not release the debt, or the bank decides the seller does not qualify for a Short Sale); the property is foreclosed upon by the bank prior to Short Sale approval.
Can we ask the bank to pay all closing costs?
Yes. However, standard buyer and seller closing costs should be expected.
Should we only pursue a property whose seller has hired a Short Sale negotiator or attorney to handle the transaction?
It is an asset to have a negotiator work on behalf of the seller. But, a negotiator is not always necessary if the seller is active in the process.
Will a full price offer or greater than list price offer speed up the approval process?
No. While the bank will appreciate the offer, the approval and seller's deficiency will still need to be negotiated regardless. It is important to remember the key is to focus on fair market value.
Can we back out whenever we want?
The Short Sale addendum outlines how much time we will allow for bank approval. Leaving the transaction prior to this deadline could result in the loss of your earnest money deposit.
I hope these answers will help you anticipate the potential Short Sale purchase hurdles!
From time to time, yes. Most people hear the words "short sale" and routinely think of a seller that is in financial trouble and needing to sell their house promptly to prevent further financial problems. This is occasionally the case and can be an opportunity for a buyer to do well from another's misfortune. Alternatively, a lender may consider a short sale even if the seller is current with their mortgage, but property values have depreciated. In cases such as these the "bargain" price may in fact be in line with actual market values, not below.
How do I buy a short sale?
If you are ready to buy, whether it is a short sale or a typical home sale, I am here to help. Utilize my experience and knowledge of real estate to feel confident that you're getting a fair deal and protect yourself during the whole purchase transaction.
Be sure to remember, there are GREAT BUYS in the market that are NOT Short Sales, Foreclosures and Bank Owned. There are MOTIVATED SELLERS in our marketplace. Call or email me today at susan@susanoakisland.com . I will be glad to assist you.
Susan Tyson Scott, Broker/REALTOR®
