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Answers (6)
- Adrienne Lally, "Adrienne Lally"
- Contributions:2093
Simply put, a short sale is a real estate transaction where the homeowner owes their lender more than what their property is worth and they need to sell. In a short sale, the lender must approve and accept less than what they are owed as full payoff (this means they may settle for $400,000, even if you currently owe them $500,000...even if the loss is hundreds of thousands of dollars). Find more information on my website at [hotlink removed by Zillow moderator]
- Sandy Curtis, "CDPESandy"
- Contributions:16
If you are contemplating a short sale, contact your local CDPE. They will be able to help you navigate and give you insight on the process. It is a great way to get the heavy burdon of a home you can no longer afford off your back!
- Joe Southwick Team, "Joe Southwick Team"
- Contributions:4
In a nutshell: When a seller must sell their home for less then they owe on the property, and the lender that they owe the money to agrees to take less than they originally loaned, that is a short sale.
Here's how it works and how you as a buyer can benefit:
Let's say Joe Seller Owes $400K on his home and he must sell. But, now the market dictates that his home is only worth $300K. Clearly no one would pay $400K for a home that should sell for $300k.
The only way for Joe to get rid of his home is to find a buyer at the new market value, let's say $300K, and get the bank he owes the original $400K, to "forgive" the $100K negative, the difference between the $300K the new buyers willing to pay and the $400K he still owes. That $100K negative difference is the "short" of the sale.
So how does this affect you the buyer if you are interested in such a home? Well here's how it works. Let's say you love Joes home, and the home is listed at $300K. So you have your Realtor submit a full price offer of $300K.
That offer must be approved by the bank that holds Joe sellers loan of $400K. This process can take up to 30 days or more unless the short sale has already been approved, I'll talk more about that in a minute.
Now, the bank typically will review your offer and often counter your offer with what they have determined to be market value.
Often by this time, you've already found another home. Or the market value has dropped and you're not willing to accept their offer.
Remember I mentioned that the bank "approval process" of a short sale can take 90 days or more unless it's an already "approved" short sale? These are the short sale homes you as a buyer should be looking for. The price you see it listed for the "approved short sale" price is typically what the bank would take if you were to make an offer on that home.
- Geraldine Vasek, "Geraldine Vasek"
- Contributions:2
The proceeds from selling the property will fall short of the balance of debts secured by liens (IRS, home owner association, property taxes, M & M liens, mortgage, lines of credit, etc) against the property and the property owner cannot afford to repay the liens full amount.
When searching for these properties, make sure you ask the agent if there are other offers, if the short sale has been approved by the lender and if there are any liens outstanding. Make sure you consider these liens when making your offer. In addition, please note that these properties are sold "AS IS" and you are responsible for all repairs. The process is not quick; therefore, be patience as it may take weeks if not months to close. Good luck
When searching for these properties, make sure you ask the agent if there are other offers, if the short sale has been approved by the lender and if there are any liens outstanding. Make sure you consider these liens when making your offer. In addition, please note that these properties are sold "AS IS" and you are responsible for all repairs. The process is not quick; therefore, be patience as it may take weeks if not months to close. Good luck
- wetdawgs
- Contributions:26853
Short sale - selling for less than the current owner owes on the mortgage.
What is a "short sale"?
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