What is a short sale?

Short Sale is a term we are all hearing more and more every day. It is becoming a large part of the home sales market. Banks are getting more aggressive with short sales and it is becoming a larger share of available property for. So if you are looking for a deal on a home you need to know how short sales work.

Short sales are not new. " I did my first short sale years ago, long before the recession. I had no idea that the bank would let someone sell their home for less than the payoff. It was very simple at the time and only took a week or so to work out." according to Mark. That in essence is a short sale. The bank allowing the owner of a home to sell it for less that the payoff.

The Difference Between a Short Sale and Foreclosure

Short Sale

• The property is not bank owned. Your offer is with the current owner.
• Schedule is unpredictable.
• Expect at least 120 days for a decision on your offer.
• Due diligence should not begin until after the offer is accepted by the lender.
• It can take 6 months to close.

Foreclosure

• The property owner is the bank.
• Schedule and closing time is predictable.
• Offer to contract time 3 days to 2 weeks
• Due diligence time under 2 weeks
• Accepted offer to closing usually about 45 days.

 

Short sales are hard to get closed. There are too many people involved and they all need to perform. The seller has the key roll. They have to do enormous amounts of paper work when they are already stressed. The realtor and negotiator have to prove a hardship and this usually amounts to 60 plus pages of paperwork that they have to extract from the seller. Some sellers will just throw in the towel and leave. The buyers get impatient. They continue looking and often see something else that satisfies their needs and they move on. Each bank handles short sales differently. Some have streamlined their short sale process and some are less organized. It is not uncommon to be involved in a short sale and get a call notifying you that the bank has decided to foreclosure on the property. Then you are back at square one.

A good deal on a foreclosure will often sell in a few days.You have to know about it as soon as it appears on the market. If you are a day late, you will loose out. They often get multiple offers and sell for more than the asking price .A short sale property on the other hand, may drop well below what it would bring as a foreclosure and you may not get into a bidding war over it.!The bottom line is; if you can be patient and work out some living arrangements, then you can probably find a home that is worth every bit of the wait.

Many Realtors say that they avoid working short sales and discourage their buyers from making offers on them. I have had good results with short sales and have some very satisfied clients as a result!

Mark Arnold

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