A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. For a buyer, a short sale can be a great way to purchase a property and save thousands of dollars on the price.
In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable and willing when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.
But to be technical, here’s a more official definition:
- A homeowner is ‘short’ when the amount owed on his/her property is higher than current 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 then ‘sold short’ of the total value of the mortgage.
For homeowners to qualify for a short sale, they must fall into any or all of the following circumstances:
- Financial Hardship – There is a situation causing the seller to have trouble affording your mortgage.
- Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that the seller cannot afford, or soon will not be able to afford your mortgage.
- Insolvency – The lender will want to see that the seller does not have significant liquid assets that would allow him/her to pay down the mortgage.
This seems simple enough, but it is a complicated process that takes the expertise of experienced professionals. John holds the CDPE® Designation and is ready to identify all possible options and, when possible, assist in the quick execution of a short sale transaction.
Buying a property where the seller is attempting to sell short can be frustrating and lengthy. In exchange for the frustration and sometimes extended process, the selling price is usually under market value. The buyer of a short sale must be willing to wait for the bank to approve the sale. A buyer who needs to close on the property and move in by a certain date is not a good candidate for a short sale. The seller’s bank will also not accept any contingencies. We can help you determine if you’re the best candidate for a short sale purchase or if a traditional resale is more for you.
If you have questions or are interesting in purchasing a short sale property, please contact The Real Estate Group for a free consultation.