Home Buying Tips in Murrieta, CA: What’s a Short Sale?
Short sales have been in the news for quite awhile now. Even so, home buyers still ask, “What is a short sale?”
In a short sale, the owner sells their home for less than what they owe.
For example, assume a home is worth $100,000 and has a home loan of $120,000. In this scenario, the owner owes $20,000 more on the loan than the home is worth. If the home is sold for $100,000, then the proceeds from the sale are “short” by $20,000 to pay off the loan in full.
“But if they owe more than the home is worth, how can they sell it?” By asking their lender to approve the sale. This means, in essence, that the lender agrees to accept the $100,000 in proceeds from the sale as payment-in-full for the $120,000 home loan.
“So lenders will approve short sale offers?” Yes, but not always. Lenders are not obligated to agree to the owner’s request to approve their short sale. However, if a home owner cannot afford to make their monthly payments (due to unemployment, for example), then the lender may agree to let the owner sell the home for less than the amount owed.
“Is it easy to submit an offer to purchase a short sale?” Yes. The offer process for a short sale is essentially the same as a standard sale. The key difference is that final acceptance of your offer requires the lender’s approval.
“How long does it take the lender to respond?” That depends on the lender. A lender’s short sale approval process typically requires a thorough examination of the home owner’s financial situation, which can take many months to complete... even a year or more. However, some lenders have streamlined their short sale process to only take a month or two, and some may respond in as little as a few weeks.
Short sales offer home buyers one more option to consider when searching for their dream home. However, buyers trying to purchase a short sale property should keep in mind that (1) it may take the lender several months (sometimes a year or more) to respond with their decision, and (2) in the end, the lender may not approve the sale.
If you are interested in more information on short sale homes, please contact me by phone or text at (951) 347-3818, or email me at Bill@my3BRealty.com.
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Murrieta is a young, affluent community, boasting an educated, high-income population that's comparable to communities in San Diego and Orange Counties. Murrieta offers a wide range of new shopping, dining and recreational options, a diverse choice in housing, and a world-class education system. Incorporated in 1991 and with a population of just over 100,000, Murrieta was recently recognized as the safest city in Riverside and San Diego Counties.
Cradled within the junction of the I-15 and I-215 freeways, Murrieta is centrally located to businesses in Riverside, San Diego, Los Angeles, and Orange Counties. New retail centers, industrial buildings, and Class A offices have been completed with more in the planning process. With over 2,000 acres of additional available land, Murrieta is attracting upscale retail centers and quality hotels, as well as research and development/medical technology firms and first-rate healthcare facilities. Murrieta is an ideal place to locate, invest, develop and expand as it is destined to become the premier business hub for the region.
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