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Where Is The Short In Short Sale?

By
Real Estate Agent with Michael Saunders & Company BK3189271

Even though short sales have become a dominant sector of the listing inventory, I find that many potential buyers and, even sellers, are naive about just what they are.  They have all heard the term "short sale", but there is a lot of confusion out there. 

Basically, a short sale is a potential way for a seller to sell their home when the current value of the home has fallen significantly below what is owed on the mortgage(s).  When this happens, which in today's economic climate is quite often, the mortgage company may agree to allow the homeowner to sell the home at the current value (less than the amount of mortgage(s) owed) and avoid a foreclosure. 

The home is listed at current market value, when an offer is received the seller signs the contract, which is now subject to bank approval, and it is forwarded to the bank.  An agent listing the property should have an experienced title company or attorney who will then negotiate the short sale with a bank.  Beware of agents who claim to negotiate short sales themselves.  Very few, if any, are experienced enough, have the time or the stamina, to negotiate with the banks.

For the seller, a short sale may be the way to sell a home and be relieved of the mortgage obligation.  A seller should check with their accountant or finanical advisor for any tax implications.

For a buyer interested in purchasing a short sale, the biggest question is, "What is your time frame?"  Usually a buyer is looking to close on a home within 30 to 45 days.  A short sale could, and usually does, take many, many months to close.  And a buyer could wait many months only to find out the offer is not going to be accepted by the bank.  The reasons for this are many.  All banks have different policies, many banks are understaffed and cannot handle the work load, paperwork is invaiably lost or misplaced are just some of the reasons short sales can take so long.  If there is more than one mortgage on a home, there is more than one bank to deal with.  Get the picture?

In summary, if you are an investor who has negotiated a great price, the long wait could be well worth while.  For a primary purchaser the experience can be frought with anxiety and disappointment. 

The opportunities are out there.  Make sure you work with a knowledgeable real estate professional and know what you are getting into.

Comments (1)

Michael J. Gallo
Florida Luxury Realty - New Port Richey, FL
Florida Luxury Realty - Gulf Home Sales Team

Hey Keith, maybe you could edit the Title of this blog to get more attraction to it and you.  It would appear that you do not know what a short sale is by the title and Obviously You Do. :-)  My impression was that you didnt know what the short was about.  Excellent Post!!  You Need More Exposure and Comments on it though. 

Nov 03, 2009 10:20 AM