If you live here you most likely have heard of short sales in Palm Beach County Florida.

You may have heard about them from the news media or from your friend down the street or your neighbor or even perhaps one of your family members. We will go through important information that you need to know before you buy or sell as a short sale in this series. This is part 1 of the series. 

We will be going through some important matters regarding short sales in Palm Beach County Florida that you should understand whether you are buying a short sale or selling a short sale. In both instances, you must have patience. 

What is a short sale? A short sale is when the homeowner owes more to his/her lender than the market value of the property. For an example: You have a loan on your house for $500,000 but in today's market a buyer will only pay $350,000 based on the last properties that sold in this neighborhood. Well, no buyer will pay $500,000 for this house  so the seller will have to ask his lender if they will take less for the note that he owes to them. If the lender says yes, than that is a short sale.

Just as there are many different lenders there are many different policies governing the short sale procedures. The lenders all have their own criteria of what short sales they will accept. Just because your house falls in this category does not mean that every house will be approved for a short sale. 

The next thing to understand for both sellers and buyers is that a short sale takes time.

We have had some short sales in Palm Beach County that have taken as short as one month to others that have been taking over 3 months to just get to the person at the lender who can make that decision. It is not as simple as just sending some documents and that is it. There are formulas that lenders use and as I said above not all lenders use the same procedures or formulas.

Some lenders outsource their short sales to a company that is proficient in the business of negotiating short sales. In these situations the lender gives the company a bottom line that they will accept, basically that is how much they are willing to lose to do the short sale.

And if you have mortgage insurance on your loan then  the mortgage insurance company will also have to approve the short sale. What happens in this situation is that the mortgage insurance company will pay the lender the difference in the loss. Please be aware that many times the mortgage insurance company will want the seller to take back a note for some of the loss and pay some of that loss back to the mortgage insurance company.  

The lender who you are sending your house payment to every month may own the note or they may just be a servicer for the lender. If they are the servicer for the loan there is an additional amount of time in the short sale process since there is yet another entity with whom the short sale will also need to be approved by. This happens a lot in situations where your note has been sold several times in a short period of time or when the lender holding the note is an investor. The investors must approve the short sale in this situation. 

If you have a first mortgage and a second mortgage with different lenders that will certainly complicate matters more and puts a kink into getting the short sale approved since the second note holder will want something to accept the short sale and usually the first note holder offers a mere token to the second note holder however you will need the approval of both lenders in order to close and pass a clean title to a buyer. Sometimes the second note holder will accept the sale if the seller agrees to owe a note to them and pay for some of the loss.  

Why would a lender want to do a short sale in Palm Beach county in the first place? Well, sometimes the loss they will accept on a short sale is less loss than if they foreclose on the property. Foreclosing is not a cheap process and in Florida it is time consuming. Most homeowners can keep the lender at bay for months and sometimes over a year. Sometimes the lender feels it is better for their bottom line to accept a short sale.

Not every homeowner is qualified to do a short sale in Palm Beach County Florida and we will cover the criteria in the next post in this series: Short Sales In Palm Beach County Florida. So stay tuned... 

Disclaimer: This post is not intended to be or to provide legal advice. We recommend that you speak to your attorney and your tax accountant regarding specifics and to find out if this is the best option for you in your situation.

Contact Nestor and Katerina Gasset, CIPS, Realtors®, International Properties and Investments, Inc. Licensed Realtors® in Florida at 561-753-0135 to list your property for sale or to purchase a property in Wellington, Royal Palm Beach, Loxahatchee, Lake Worth, Hypoluxo Island, Lantana, West Palm Beach and the rest of Palm Beach County Florida. We are accepting referrals.

Copyright © 2008 By Katerina Gasset, All Rights Reserved. *Short Sales In Palm Beach County Florida- What you need to Know If You Are Buying Or Selling.* Contact Katerina Gasset for Customized Business and Personal Coaching.

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P.S. If you are listing your home as a short sale in Palm Beach County Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 561-753-0135 to find out more.