The Story on Short Sales
Many potential home buyers and sellers are attracted by short sale properties. However, the term "short sale," which is used to describe the type of purchasing option available for the particular home, can be misleading. Rather than thinking of the term to describe the length of time it will take to move into your new home, it is a term used to indicate that the seller of the home will be "short" on their payment of funds to the bank when they sell it. It describes the seller's money, not the buyer's time.
Short sale properties that are currently under contract will frequently need additional time as the creditor and borrower negotiate terms to keep the property out of foreclosure status. Financial institutions that own the sale properties will then base the price they will consider accepting upon the current market value of similar homes. Sometimes this will allow the potential buyer to obtain the home for less, but more often it will merely require an additional time commitment for all interested in the property.
Before qualifying to list their sale properties as short sales, homeowners will be required to prove they have some sort of economic hardship that prevents them from re-paying the deficiency in their loan. They will need to complete a short sale package with a hardship letter that explains why a short sale is needed.
One reason for some short sale properties' lengthy process is that there can be numerous financial institutions listed as creditors for one home. All creditors involved will need to evaluate and approve the terms of the specified short sale in order for it to be accepted; it will affect all that are involved when asking to accept less money than is owed. An appraisal or Broker's Price Opinion that will be completed on the sale properties will help determine if the terms are comparable to other homes in the area. All these steps combined can take several months from start to finish.
The number of procedures involved to complete negotiation for short sale properties can make it a complex and highly specialized process. Because of this, it is in a purchaser's best interest to seek assistance from a real estate agent and reputable mortgage lender before getting too far. Real estate professionals at all levels have a wide view of the market and will be able to help successfully navigate through short sale transactions. They can also assist in finding great sale properties that are not currently in short sale status so that you can avoid waiting to enjoy a new home. A buyer who is looking to move into a home right away should be sure to communicate with the realtor and mortgage lender that a short sale may not be what he is looking for, and a real estate professional should be clear when making decisions including short sale properties that the process will be longer than usual.