What Is A Short Sale?

This is the period of time, which usually lasts a few months, at which the home will have to be sold short of the loan before it goes into foreclosure. However not all short sales are pre-foreclosures. Sometimes a borrower wants to sell their home short before they default. All borrowers have to provide proof of financial hardship to the bank by filling out paperwork such as form 710.

What a short sale really means is that the sale of a home price will be lower than the actual mortgage amount. This usually requires approval from the bank to proceed with any offers on the house. So for example, if a buyer brings in an offer to the seller (the borrower), the bank will have to approve that price after doing research on what the market prices are. A short sale is often much better than a foreclosure because a foreclosure does a lot of damage to credit ratings.

Each short sale processes differently due to there being a whole lot of moving parts. There might be junior loans on the property which requires approval from all of the different lenders attributed to the property when an offer takes place. Also, FHA homes have different processes than VA homes or traditional conforming loans that takes guidance from Government Sponsored Entities (GSEs) such as Fannie Mae or Freddie Mac.

Further, short sales might also contain inherent liens that the investors who purchase such properties will have to be held liable for. Liens such as mechanics liens or property taxes and etc. This is why a title search and appraisal is often necessary prior to buying short sales.

There are different nuances for each short sale as each lender has different ways of processing. This is why short sales are more technical in nature to traditional home purchases. Also timing varies for each short sale transaction, depending on if they are non-judicial or judicial proceedings, along with all of the other variables mentioned above.

Short sales are complicated forms of transactions and as a result you would need to hire a distressed property expert. There are many technical steps related to buying short sales or listing short sale homes. Time is of the essence with such properties due to variable closing timelines inherent in each short sale, and because if it is in default, there are only so many months before a foreclosure sale occurs.

This is short sales in a nutshell. Email, text, or call me at any time if you would like to list your home with me. I would be so glad to help, and in a dignified manner which honors you. Thank you so much for reading, and until next time, just remember "you miss 100% of the shots you don't take" like the great Wayne Gretzky.
What Is A Short Sale? What Is A Short Sale? Reviewed by Alex Sung on February 24, 2020 Rating: 5

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