No matter which side of the transaction you are on buying or selling in a short sale situation can test even the most savvy consumer. Buyers and sellers should understand the process to determine if it is feasible for their specific situation. While a buyer and seller may agree on the initial terms of the transaction it is up to the lenders to make the final determination.
The need for a short sale generally arises due to unforeseen circumstances of homeowners with limited equity who are unable to pay their mortgage. Job loss, divorce, illness and death of a spouse can all lead to financial difficulties that make it necessary for families to relocate. Declining home values in some areas add to the need for a short sale. It is very important to keep open lines of communication with lenders at the first hint of trouble.
By working with your lender and exploring available options you can determine if you need to consider a short sale since short sales are generally an option to avoiding foreclosure. You must provide up to date financial information and proof of income to the lender, along with hardship letters explaining why you are unable to meet your mortgage obligations. The lender will likely request any and all documentation relating to the reasons for the financial distress including current bank statements. If there is more than one mortgage both lenders must agree to the sale.
While buyers can get a bargain on a short sale property closing can take much longer than tradition purchases and delays can occur. Most often the property will be sold in ‘as is’ condition and if any repairs are needed it will be up to the buyer to have funds for the repairs. Waiting for lender approval on a short sale can take weeks in most cases and many buyers get discouraged due to the delays.
Short sales are generally listed just like any other homes for sale but due to the limited time to sell are often offered at a discount. Like a normal sale the buyer and homeowner must agree on price and your REALTOR® can help you determine current market prices. Problems will arise if the agreed price is out of line with market prices. If the short sale list price is well below market value this could be a red flag since a lender will not normally agree to unrealistic sale prices. Offering full price on a deeply discounted listing is no guarantee the lender will agree to the sale.
Short sales offer solutions for homeowners who face financial difficulties and discounts for buyers looking for a home to purchase. Understanding the process, having realistic expectations and a REALTOR®
Short sales offer solutions for homeowners who face financial difficulties and discounts for buyers looking for a home to purchase. Understanding the process, having realistic expectations and a REALTOR® experienced with short sales can help you determine if a short sale is right for you. Contact Sandra Bundy for more information. Copyright© 2009 , Sandra Bundy, Broker-in-Charge, B&P, Inc.
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