How Does A Short Sale Work?

By
Real Estate Agent with eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales B.R.E. 01191194
https://activerain.com/droplet/6H6

Question: I am interested in a house that is a short sale. How does that work?

Answer: That is a huge question! Here is the very simplified version of the answer:

•1.       The seller owes more money to the bank than home is worth but still needs to sell it.

•2.       The seller needs to get permission from the bank to sell the house for market value and have the bank agree to take less than what they owed.

•3.       If there is more than one loan or other liens against the house they all have to agree to accept a payoff that is less than what they are owed. The first lender will decide how much the house must sell for and how much they are willing to give to any junior lien holders to accept a short payoff.

•4.       The junior lien holders then decide if they will accept what the first lender offered or if they want to stop the sale.

•5.       Any of the lien holders can ask the seller to contribute money to close the deal.  The seller can agree or refuse to do the short sale.

•6.       The buyer can either accept the price the bank has insisted on (if it is higher than their original offered price), or they can  say they do not want to buy the house.

•7.       The process of short sale approval can take anywhere from a month to a year. It is only worth making an offer on a short sale if you are motivated to wait out the process and do not have a deadline where you must buy that house.

•8.       Once everyone agrees to the price and terms, the seller, the buyer, the banks, then the sale goes pretty much like a normal transaction but must be an As Is sale with no money going back to the seller for anything.

•9.       This is a very simplified explanation and there are many nuances to a short sale, but this is the general overview.

 

Marcy Moyer

Keller Williams Realty

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285

D.R.E.  01191194

Posted by

Marcy Moyer eXp Realty of California  Specializing in Probate and Trust Sales, and Rental Investment Properties

 

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Rainmaker
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The Diamond Group @ Keller Williams - Lubbock, TX
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The buyer and seller both need to have patience and not get easily spooked.  It is a process.

Jan 17, 2011 04:17 AM #1
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Chris Alston
Chris Alston (Keller Williams Realty, Silicon Valley, California) - Campbell, CA
Silicon Valley, California

Perfect!  Great checklist, and all spelled out in a great blog.  I hope your Monday is awesome!

Jan 17, 2011 05:23 AM #2
Rainmaker
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Marcy Moyer
eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales - Mountain View, CA
Probate, Trust, and Investment Specialist

Elizabeth, you are right.

Thanks Chris!

Jan 17, 2011 06:35 AM #3
Rainmaker
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Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

Hi Marcy: I'd probably change number 4 from "want to stop the sale" to "want to go pound sand." LOL.

Jan 18, 2011 03:07 AM #4
Rainmaker
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Marcy Moyer
eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales - Mountain View, CA
Probate, Trust, and Investment Specialist

Elizabeth unfortunately I think you are right.

Jan 18, 2011 03:26 AM #5
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Marcy Moyer

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