I thought today I would answer the million dollar question...If there is one real estate topic that people are bewildered about or completely misinformed...it would be this: WHAT IS A SHORT SALE?
Well, what is a short sale? It is when a seller has a mortgage balance that exceeds what the home is currently worth AND does not have the money to make up the difference AND has a financial hardship. Homeowners are under the impression that they can walk away from a home they own on a whim, with a savings account and be approved for a short sale. Sorry folks, not the truth!
What can you expect when BUYING a short sale property? Be prepared to wait...and then wait some more. The typical short sale takes somewhere between 3-6 months from contract to closing. Many buyers I work with think that the listing price is what the bank is willing to take for the property. Many times, it is a price to attract attention and ultimately...offers! It is not necessarily what a bank will accept. Once a property has a contract, the bank will assign a negotiator and order a BPO. A BPO is what the bank will use in order to determine market value and will respond accordingly. If the contract price is significantly lower than the BPO, usually the bank will either counter in price and terms or reject. The thought among buyers is that a short sale will be a steal; not true! It will be what FAIR market value is for the subject property. There are several factors that affect the amount of time it will take to get response/final approval from the bank: The amount of loans the property has, the bank/banks who hold the loan, If paperwork has been submitted by seller to the bank, who the negotiator is, how long the seller has been delinquent on payments, if there is PMI...etc. As a buyer trying to purchase a short sale, many things are out of you and your agents control...which can make the process a bit frustrating and stressful than a regular resale. Keep your eyes on the prize(your future home) and be patient. Know what to expect, and it won't be as frustrating.
What can you expect as a SELLER, selling a short sale property? It is a humbling and sad experience for most of the sellers I have worked with when selling your home as a short sale. The first step is having to fully accept the situation and let go of the property emotionally. The realization that there is a 3rd entity(the bank) that has no attachment and wants to be rid of your property from their books is hard for most to deal with. The next step is to get all of your financial paperwork in order and in to the bank. They will want all of your tax returns,bank statements, pay stubs..etc. You will also need to furnish a "hardship letter" explaining why you need to leave your house and what the events were leading up to this. Once you get a contract, the bank will most likely negotiate the price with both you and the buyers. Hiring an attorney is a good idea if you are trying to move on without a deficiency. Again, this is a painful and frustrating process...it is also time consuming. Typically 3-6 months... Keep in mind it is necessary to move on with your life...and try to be as cooperative with your bank as possible.
If you are in a situation where you are struggling with your payments, there are MANY programs for loan modification out there. You may qualify...get proactive!
Melbourne area FL Real Estate Sales and Solutions-Sue Farrell and Corrine Negron Exit 1st Class Realty is one of the areas fastest growing real estate firms. We specialize in helping buyers and sellers invest in real estate in the Melbourne, Viera, Suntree, Baytree,Lake Washington,Eau Gallie,Palm Shores, Summer Brook,Indialantic, Indian Harbour Beach, Satellite Beach,West Melbourne, Rockledge, Palm Bay and the surrounding areas. 321-543-7881
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