Short Sales- What Are They?

When looking to buy a home, many times you see the phrases “short sale” and “foreclosure.” For many first time home buyers, they may not know or understand what that means.

A short sale is defined as a “sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens full amount and where the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt.”

To put it in simpler terms: a short sale is a sale of property that sells for less than the balance owning on its mortgage.

Short sales can be on apartment buildings, vacant land, or single family residences. Not every property can qualify for a short sale in the banks eyes. A bank has to agree to a short sale if they feel as though it is in their best interest to approve the short sale if they see that it can make more money through a short sale rather than a foreclosure.

So what’s necessary for a short sale? Many short sale transactions are normally handled by agents that specialize in short sales and/or foreclosures. What makes a short sale work is an “underwater home,” a willing short sale bank, a seller with a financial hardship, and a buyer that is willing to purchase the home.

Agents will determine the type of short sale (Fannie Mae HAFAs, non-GSE HAFA’s, etc.) and gather the required paperwork to submit to the bank. The agent will help the seller to price the home so that it is attractive enough to entice buyers to buy it, and is high enough to satisfy the banks interest in the home. The agent will put the home on the market and submit all offers to the seller. The realtor will also negotiate the short sale and submit the short sale approval letter to the seller.

Still have questions about a short sale and the process? Give me a call today at 619-250-4541 and I would be happy to help!

 

Your Local Real Estate Expert,

STEPHEN NISSOU