There are so many short sales currently on the market that some people are touting 2010 as "the year of the short sale". For those of you who aren't familiar with the term, short sales occur when a lender allows a property to sell for less than what is owed on the mortgage and takes a loss.
Here are a few tips that I have learned from my many short sale transactions:
What is the time frame on a short sale property?
It is my experience that buyers can wait 4 to 6 weeks just to receive a counter offer on an unapproved short sale. Once the buyer and bank agree on a sale price the deal can typically close in 30 days. There are new government regulations that have been put in place to speed up the process but I have not personally experienced any change in the timing. Truth be told, there doesn't seem to be any way to force the banks to comply with the new regulations.
If I short sell my house, how long will it be before I can get another mortgage?
According to the New York Times, the average person who short sells their house can get a mortgage within 2 to 3 years. This is compared to 5 to 7 years if your home goes into foreclosure. Keep in mind these numbers don't factor in any other credit issues.
Maybe you can get a loan modification as opposed to short selling the home?
Maybe you can but maybe you can't. In the TARP report to Congress in January of 2010, 3+ million people have requested a loan modification in the United States but only 166,000 have received a permanent one. Personally, I know about 3 people who have been successful getting a loan modification and more than 20 who have not.
Maybe You Should Foreclose On Your House Instead of Short Selling It?
Keep in mind that when you walk away from a home in a foreclosure the bank can come after you for the difference between what the mortgage was and what the bank ultimately sold it for - i.e. deficiency judgment. Most of the time in a short sale the lender will release the seller from any future obligation of debt.
What Are The Questions I Should Ask When Submitting An Offer On A Short Sale?
- Is the short sale "unapproved" or "approved"? The difference is night and day and can take weeks off of your closing date.
- Are there any other offers? Many times an agent will keep a short sale "active" because they want backup offers knowing that the original buyer often times won't stick around until the bitter end. But sometimes they do stick around and you should know ahead of time where your offer stands.
- Is the seller working with an attorney? If so, this can help the process move much more quickly.
- Am I required to use the seller's attorney as my title agent? Many times, an attorney will not agree to handle a short sale transaction for the seller unless it is stated in the contract that they will get the buying side of the deal as well. They don't make much money on handling a short sale transaction and try to recoup some of their cost on the Title. If this is a deal breaker for you, you should know it up front.
- Is it a local bank? Local banks seem to negotiate short sales much faster than larger national banks.
Short Sale Properties In Coconut Grove?
Click Coconut Grove Short Sale Properties to scroll through the 100+ short sales available in Coconut Grove. If you would like to see any of them give me a call and I would be happy to arrange a showing for you, as I said I have a great amount of experience dealing with short sales on the buying and selling side and would be happy to assist you.
To view this post in its original form, visit my Coconut Grove Real Estate blog.