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Answers (9)
- Hazel Yoshida 951-805-9414, "Hazel Yoshida"
- Contributions:1739
All of these answers have great information. We often refer to short sales as "long sales" as the time frame to get an approval from the lender or lenders can range anywhere from a few weeks to several months, and there is never a guarantee that the short sale will be approved. As a buyer it's a great option to get a good buy on a home, but you must be patient and willing to wait it out. Good luck.
- Priscilla Hammond, "priscillasellsatl"
- Contributions:82
A property being sold for less $ than what is owed on the current mortgage.
- Larry & Laurie Webb, "Dream Maker Realty"
- Contributions:298
it means that a bank will agree to take less than what is owed on a house
www.Team-DreamMaker.com
www.Team-DreamMaker.com
- Kamil Andrukiewicz, "homesbykamil.com"
- Contributions:57
Check this website out, it's a guide to short sales
http://www.realtor.org/library/library/fg335
http://www.realtor.org/library/library/fg335
- Lisa LeQuire, "LeQuireLisa"
- Contributions:38
It is when the seller asks his lender to accept less than is owed on the mortgage. Seller will be selling the home "short" of loan total.
- Paul Zorich, "Paul Zorich"
- Contributions:32
question is easier to ansewr than "How does a short sale work". Every Bank/Lender is different in their systems to deal with short sales, there is no one way to do it, and all banks take months to complete a short sale transaction. I have seen one closed in 55 days, but most take 90 days or longer IF the Realtors involved know what to do and push the process along, and if all parties cooperate. A short sale is when a Selle of a propty sells their house for less than what the mortage amount is currently owed. For example, the house may only sell for $150,000, but the Seller owes $200,000 to the bank... the Seller is selling the house $50,000 "Short" of what the bank needs to pay off the mortgage note, therefore, the bank and their investors must consider and approve a Short Sale, which means they will have to take substantially less than what is owed on the house. Not only do you need the Sellers approval on your offer, but more importantly you need the Sellers Bank to approve this. These are becoming most common, but most Buyers do not have the patience to wait many months while the bank takes their time. These are much more complicated that they first appear. Best of luck!
- Matt Difanis, "mdifanis"
- Contributions:43
Sushmapar:
Lonnie's description is correct, but there are some distinct upsides and downsides to be aware of as a buyer. The biggest downside is uncertainty. Since the Seller's lender must approve the sale (because it is the party being asked to take the hit for the difference between the proceeds of the sale and the balance owed on the mortgage), a buyer may wait weeks or months to find out whether the sale will get approved--or not. Most buyers cannot be infinitely flexible in this manner, as most folks have a firm lease expiration date or other circumstance that requires that they have a definite move date. A short sale will not work unless the buyer can be patient for up to a few months and is prepared to start back at square one if the sale is not approved.
The biggest upside of short sales for buyers is directly related to the downside. Since most buyers (probably 60% to 70%) cannot deal with the uncertainty, the drastically reduced pool of buyers means that short sales very commonly sell for less than the fair market value of the identical home in identical condition that is not a short sale. So if you can tolerate some timeframe flexibility, you may be able to score a better deal.
You must also be prepared to accept the house as-is, since a Seller who no longer has any equity won't have any motivation (and often lacks money) to do repairs or improvements. But short sales are not always in rough shape. In fact, many are in very nice, owner-occupied condition.
Matt
Lonnie's description is correct, but there are some distinct upsides and downsides to be aware of as a buyer. The biggest downside is uncertainty. Since the Seller's lender must approve the sale (because it is the party being asked to take the hit for the difference between the proceeds of the sale and the balance owed on the mortgage), a buyer may wait weeks or months to find out whether the sale will get approved--or not. Most buyers cannot be infinitely flexible in this manner, as most folks have a firm lease expiration date or other circumstance that requires that they have a definite move date. A short sale will not work unless the buyer can be patient for up to a few months and is prepared to start back at square one if the sale is not approved.
The biggest upside of short sales for buyers is directly related to the downside. Since most buyers (probably 60% to 70%) cannot deal with the uncertainty, the drastically reduced pool of buyers means that short sales very commonly sell for less than the fair market value of the identical home in identical condition that is not a short sale. So if you can tolerate some timeframe flexibility, you may be able to score a better deal.
You must also be prepared to accept the house as-is, since a Seller who no longer has any equity won't have any motivation (and often lacks money) to do repairs or improvements. But short sales are not always in rough shape. In fact, many are in very nice, owner-occupied condition.
Matt
- Laura Coffey, "SCV ReMax Realtor"
- Contributions:278
A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. However, hiring an experienced short sale agent is key to your success.
But to be technical, here's a more official definition:
- A homeowner is 'short' when the amount owed on his/her property is higher than current market value. For example:
Loan Amount: $550,000
Market Value of Real Estate: $425,000 - A short sale occurs when a negotiation is entered into with the homeowners mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then 'sold short' of the total value of the mortgage.
- In the above example the property is at a minimum upside down $125,000. In order to get the bank to take an offer at $425,000 you need a short sale expert who specializes in negotiations with banks and marketing short sale properties to the real estate community.
For homeowners to qualify for a short sale, they must fall into any or all of the following circumstances:
- Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
- Monthly Income Shortfall – In other words: "You have more month than money." A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
- Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
- Lonnie Keyser, "lonniek1"
- Contributions:50
A short sale is a situation where the seller owes more on the loan than the sale of the property will likely produce on the market and the seller is unable to bring money to closing. The lender has not yet foreclosed on the property, which allows for the owner to sell the property. The lender ultimately has to approve any short sale, and they are somewhat time consuming. Some things to keep in mind, the sell has to have some hardship that makes it impossible or extremely impractical for the seller to keep the property. The seller should contact the lender to see if a short sale would be possible, and to get a short sale package to get the ball rolling. I hope this helps.
what is short sale?
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