Short sales have gotten more and more common in the past few years, since the real estate bubble popped and banks have become eager to avoid the costly foreclosure process. While the a short sale can be a long and frustrating ordeal, the end result is really a win for all parties involved. The seller is no longer troubled with that debt, the buyer gets what they want at a reduced price, and even the banks sometimes offer benefits at the end of the process. Whether you may be selling or buying, there are a few things to keep in mind if you are considering a short sale. Let’s uncover the top five.
- Long Time Closing – “Short Sale” is sort of a misleading name. It doesn’t refer to the time involved but to the seller coming up short on the loan payoff. This is why short sales can take up to 9 months to close and sometimes even longer. The bank has to approve the finalized price and negotiating has to be done between the seller and buyer. Approval can take a long time, and if the bank denies the first offer, it could take even longer to accept the second.
- Find An Agent – This isn’t time to go at it alone. Find an agent, one who has experience dealing with short sales. There is a lot of extra paper work to be filled out when it comes to short sales, and you want someone who knows what they are doing. This will make the closing process less stressful and keep things moving forward. These days, banks are accepting more short sale offers than ever, and it’s very likely they will process a file more quickly if the paperwork is complete and correct.
- Buyer Beware – Just like foreclosures, most short sale properties are in need of repair. Since the homeowner is experiencing financial hardship, maintaining the home may not have been high on the priority list. If you are thinking of buying a short sale, inspect the property thoroughly and first hand. Hire a trusted inspector to take a look as well. Many short sales are listed “as-is” and the seller will not complete any repair requests.
- Get the Lenders on Board – Remember, more than one lender may be involved in a short sale. It’s common for a struggling homeowner to have a second mortgage, or home equity line of credit, and you need those lenders to approve the short sale, as well. This can make the process a little more difficult, since you are having to deal with the “junior lenders” and they end up eating a big part of the loss. Deal with the main lender first, but be sure to check with any other liens on the property. Skipping this step can lead to major difficulties later on in the process and will definitely slow things down.
- Seller Beware – When it comes to short sales, both sides of the deal can be tricky. If you are the short seller, the bank can sue you for the loan balance on the home, so it’s important to protect yourself. So called “deficiency judgments,” in which a borrower cannot pay back a loan, are legal in most states, but not all. Talk to an experience real estate agent or attorney to find out what the laws are in your state. In many cases, you may require the bank to waive the right to come after you for the difference as part of the short sale agreement.
For more tips on Short Sales, please visit http://home.howstuffworks.com/real-estate/selling-home/10-things-to-know-about-short-sales.htm#page=11
And for more information go to http://home.howstuffworks.com/real-estate/selling-home/short-sales.htm