What is a Short Sale?
- The home's market value has dropped: Comparable sales must show that the home is worth less than the unpaid balance due to the lender.
- The mortgage is in or near default status: Majority of the time lenders will not consider a short sale unless the owner is behind on payments.
- The seller has fallen on hard times: The seller must submit a letter of hardship (along with bank statements, income verification, financial budgets, etc.) that explains why the seller has or will stop making monthly payments. Examples of hardship include: unemployment, divorce, medical emergency, bankruptcy, death, etc. A few examples that DO NOT constitute a hardship are: bad purchase decisions, unhappy with home or neighborhood, purchasing another home or a growing family.
If you (or anyone you know) are having a hard time and you think you might be eligible for a short sale, give us a call. We currently have three short sale properties on the market and have recently closed one. We will be happy to answer any questions that you have. Not only can we list short sale properties, but we can help you negotiate with your mortgage company and manage all of the paperwork that is needed to complete such a sale.
Short Sales from a Buyer's Prospective:
Like foreclosures, short sales are priced aggressively and buyer's can find themselves quite a deal in purchasing a short sale property; however, short sales aren't a good match for every buyer. Short sales normally take longer to close than a regular resell property or even a foreclosure because there's a pretty lengthy process involved in getting a short sale approved. The mortgage company's loss mitigation department will have to work the contract through the system which can take time (and you would expect so when they're taking a loss on the property). So if you're not in a hurry and you're looking for an excellent deal, a short sale may work for you.
Things to Know When Looking for Short Sales:
- Always have your agent talk with the listing agent to inquire on the status of the short sale. A lot can be learned by doing this. Often times the listing agent will tell you if it's worth your time or not. Make sure you're represented by an agent who is familiar with the short sale process so they can keep tabs on what's going on. If you have an agent who is unfamiliar with short sales, you might end up getting one story after another from the listing agent; however, if you're agent knows what should happen & when - then they can check in with the listing agent & help guide you right to the closing table!
- If it sounds too good to be true, it probably is. Agents sometimes price properties much lower than fair market value in effort to obtain offers. Mortgage companies normally want an offer in hand before they complete the short sale approval. Once they get an offer and run it through the process, they will bump up the list price to where it should be. Beware of properties that are priced extremely low (as in too good to be true low).
- Mortgage company's don't always tell the listing agent what they should list the home for. They leave it up to the agent to price it at fair market value. So even if a buyer were to submit a full price offer based on the list price, the mortgage company may still reject it in the review/approval process if the numbers don't work out.
- Think of a short sale property as being sold 'as-is'. Majority of the time, the seller doesn't have money to make repairs.
- No two short sales are the same. Every mortgage company has a different process for dealing with short sales. If you have a bad experience with one short sale property, don't assume that all of them are bad.
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