What
is a Short Sale? As a
Realtor, I have been asked this question many
times. At first I was surprised at how the person
asking the question didn't know. I know because I am in the
industry and they are pretty common in my area.
For
a detailed description, please see Short Sale Definition.
Basically, a Short Sale is when the seller has to sell their property
for less than they owe on their mortgage. Okay, now you know
what a Short Sale is by definition. Now here is a description
of the parties that are most commonly involved in these types of sales.
-
Seller - Person(s) that holds legal ownership of the real estate.
-
Buyer - Person(s) that are purchasing the real estate.
-
3rd Party - Lender that has a financial interest in the property being sold. Without their approval the transaction will not go forward.
-
2nd Mortgage or 2nd Lien holder (in some cases) - Lender that holds a financial interest in the property. Most commonly a home equity loan.
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Listing Agent - Agent/Broker that represents the Seller in the transaction. They owe the seller undivided loyalty, utmost care, disclosure, obedience to lawful instruction, confidentiality and accountability. They must put the seller's interest first and negotiate for the best price and terms for their client, the seller.
-
Buyer Agent - Agent/Broker that represents the Buyer in the transaction. They owe the buyer undivided loyalty, utmost care, disclosure, obedience to lawful instruction, confidentiality and accountability. They must put the buyer's interest first and negotiate for the best price and terms for their client, the buyer.
Now
you know the definition, you know who the potential parties to
the transaction are, now what? Ask yourself, is a Short Sale
right for you? This is an important question to ask and one
that should not be taken lightly. Here are a few
things in no particular order to consider BEFORE you get
involved:
-
Is the Seller delinquent on their present mortgage? - No motivation for the 3rd Party to accept a loss when they are getting paid.
-
Is there equity in the home? - Chances are the 3rd Party might opt for foreclosure rather than considering the Short Sale option.
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Has the 3rd Party started foreclosure proceedings? - If so, find out how far along they are in the process.
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How much time do you have before you need to move? - Generally 60 days plus to closing on these sales.
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Is there a Second Mortgage on the property? - Not always impossible, but it becomes much more complicated.
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Do you have legal council? - Always a good idea with these types of transactions, whether buying or selling.
-
Do you know the tax ramifications? - If you are the Seller, check with your accountant or tax professional to see how this will impact you.
Each
Short Sale is as individual as the property, and the parties
involved. The above questions only scratch the surface of the
intricacies involved with a Short Sale. Each question can
lead to a host of other questions, so please make sure you ask
and get answers to all of your questions.
If
I can be of any assistance, please do not hesitate to contact me judy@cedroneandmacdonald.com.
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