Today, there is so much talk about sellers that are putting their homes up for a short sale, that often times we take for granted that everyone knows what the term ‘short sale’ actually means. Last week I was on the phone with a buyer and I mentioned short sales, and quickly realized that this client didn't quite understand the term.
According to the Melbourne Association of Realtors here in Melbourne Florida, ‘a short sale is when a bank or a mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. The homeowner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender to satisfy the debt.’ The lender has the right to approve or disapprove a proposed sale. And, the lender determines whether they will file a deficiency judgment against the seller for the difference between the net proceeds of the sale on the home and the mortgage balance.
Often times a short sale is a more favorable option to a lender than the home going into foreclosure. Typically, a short sale can be quicker and less costly than a foreclosure. For the homeowner it keeps them from having a foreclosure on their credit history, which typically is reported for a longer period of time than a short sale.
In researching listings in the Brevard MLS the Melbourne Association of Realtors MLS reminds consumers that a list price in the MLS may not be a price that a lender will agree to. They may want more money based on a BPO, or Broker’s Opinion of Price, based on comparable homes sold in the area over the past 3 months. Or they may agree to accept the buyer's lower than list price offer. They may not agree to a short sale for a particular homeowner at all. But, typically they require an Offer to Purchase be presented before they review a consumer’s complete package of documents, to determine whether a short sale is an option to an owner.
Multiple offers may be presented to the lender on the same property before the lender makes a decision on a short sale, depending on the lender.
Some short sale negotiations can take weeks and some can take months.
The most important advice we can provide in determining whether you are considering a short sale, a deed in lieu of foreclosure or a foreclosure is to seek the advice of a professional. Talk to an attorney or an accountant BEFORE making any decisions at all. You need to be sure that you understand how your decisions are going to affect your individual situation, and your credit history in the future.
This article is authored by
Sandy Shores Realtor, Melbourne FL Real Estate
Brevard County Real Estate & Investing
Palm Bay Florida Real Estate News
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