What is a Short Sale?
A real estate Short Sale is when a Lender agrees to sell the home at a price that is less then what is owed on the property.
Buying a Short Sale
- When you purchase real estate, sometimes it can be purchased as a result of a “Short Sale” which is nothing other than the bank agreeing to sell the home at a price less than the mortgage balance.
- As a result of the home being sold as a “short sale”, people assume that they are getting a great deal. This is not always the case. Although purchasing a short sale is often a great way to purchase real estate, many times due to the real estate market going through a downturn, you can purchase a home and still experience a reduction in value.
- I feel that the key to having success when you purchase a short sale is to make sure that you do research on the market conditions and area of the home, and have an experienced agent representing you exclusively as a “Buyer’s Agent”.
Short Sale Process
- The short sale can be very confusing because it is not as common as a regular real estate transaction.
- Typically the short sale process takes longer (3-4 months average) because the Seller’s title company or attorney has to deal directly with the bank and gain their approval to sell the home.
- When a client makes an offer to purchase a real estate short sale they do not have the benefit of getting a quick response like they would from a regular seller; however, the positive aspects of waiting for an approval from the lender certainly outweighs the negative.
- The short sale process begins with the Seller having to show that they are eligible for a short sale.
- All lenders typically require 2 years of tax returns, 2 years of W2’s, most recent month of bank statements for all accounts and a hardship letter.
- The process of getting approved for a short sale is the exact opposite of what a borrower goes through when they are trying to obtain financing.
- When a borrower obtains financing they have to show that they can afford to make the mortgage payments.
- When a Seller is trying to get the bank to approve them for a short sale, they have to show the bank that they have made every attempt possible to try and make the payments.
- If a lender sees that they have other liquid assets, they will not be very likely to help a seller out and approve them for a short sale without expecting some additional form of compensation at closing
Embracing Short Sales
- Short sales are fast becoming the preferred option for buyers wanting a “great deal”, and sellers who want to try to avoid the stigma of foreclosure and its long-lasting stain on their credit worthiness.
- At the same time, buyers perceive purchasing a short sale property as one of the best guarantees of a super deal; while banks have finally realized that they are likely to recoup more of their original investment by pursuing short sales instead of foreclosures.
- That being said, a short sale remains no less frustrating or time consuming for everyone involved in the process, unless you deal with professionals such as Florida Auctioneers & Realty, LLC…..turning negative market forces into positive opportunities for our clients.
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