What is a Short Sale?
A "short sale" is a real estate transaction, where the lender or lien holders accept less than the amount owed on the balance due to the bank. It can be a more favorable alternative to letting the bank foreclose on your property.
Example:
Seller Bob owes $300,000 on a property that is now only worth $240,000. Bob accepts an offer of $238,000 on his property and submits a "short sale" package to his bank through his Realtor. The lender accepts the $238,000 and relieves Bob of $62,000 worth of mortgage debt.
This is where some buyers get confused. The seller still owns and controls the property, not the bank. This is different than a foreclosed property where the Bank owns the property and makes all the decisions. The seller will accept an offer contingent on lien holder approval. The seller has a right to not accept an offer and forward it to the bank to get permission to sell it at a loss.
As a seller what do you need to know:
- The short sale will effect your credit, but not as badly as a foreclosure.
- If negotiated properly, you will not have a deficiency judgment filed against you. You will have the threat of a deficiency judgment hanging over your head in a foreclosure. The banks have 3 years to file and 20 years to collect.
- A short sale is considered co-operating with the bank, they would much rather accept a short sale than foreclose.
- A short sale saves you the embarrassment of a foreclosure. It is a voluntary sale.
As a buyer what do you need to know:
- It can take two to four months to get an offer approved by the bank.
- During that period if a better offer comes in you can be kicked to the curb.
- The seller has no money to do repairs after a home inspection. You pretty much have to accept the property as is.
- The bank will want you to close in 30 days or less after approving the short sale.
Why are there so many short sales?
Real Estate buyers who have purchased a home in the last 2-7 years have seen the equity in their homes drop. If they need to move due to a variety of reasons or fail to be able to meet there monthly obligations, they are in the position to have their homes foreclosed upon. A short sale is the last step before a foreclosure.
If you are buying or selling a short sale it is important to use a real estate agent that is experienced with short sales. If you are a seller looking for an experienced short sale agent, Call Kevin for your no obligation short sale consultation.
This post was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. You can contact Kevin by email at kevin@kevinvitali.com or call 978-360-0422.
I pride myself in the quality of my work while helping buyers and sellers make dreams come true.
Real Estate Services in the northeast Massachusetts, around the Merrimack Valley, Southern New Hampshire including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence, Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury