Buying a Short Sale- What you must know....
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Dfinition of a short sale: A short sale
of a property is where a homeowner must sell their home due to a
hardship (usually financial) for less money than what is owed to the mortgage
holder(s). In a short sale the seller
must get permission from the lien holder(s) to sell for less money than what is
owed.
Many times their can be more than one lien holder,
there can be a first mortgage, a second mortgage, a home equity lien of credit
and /or private mortgage insurance. All
of these parties must come to terms on the short sale.
Because many of these home owner are under financial
distress there can also be tax liens, municipal liens and so on. Provisions need to be made for all of these
entities to be satisfied.In many cases a short
sale is cheaper for the bank to allow than going into the foreclosure
process. They get the house sold with
out ever taking possession of the home.
A short sale can save a bank $20-50,000.
The short sale process can
be very involved and take time. As a
buyer once you have tendered an offer on a short sale, it is packaged with a
complete seller financial package and submitted to the loss mitigation
department at the bank. There the short
sale package will be assigned to a negotiator for a review. Once the negotiator has the file they will
review the file to see if there is truly a financial hardship and then will
order a Broker Price Opinion or Appraisal of the property. What comes back for a number is what the bank
will work from. Many times the bank must
actually talk to the final investor and
/or a private mortgage insurance company to approve the short sale.
Once the first lien holder has approved the deal many
times there are other parties like a second lien holder that must also approve
the deal. All of this takes time!!
Hopefully all parties will come to terms in the
negotiating and the short sale will be approved.
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Some things to remember about short sales:
- You
are negotiating with the home owner, not the bank.
- Short
sales require at least 90 days for approval if not more. If you do not have the time to wait, do not
consider a short sale.
- Meaning the lien holder(s) must approval the
deal for a valid contract.
- Every
real estate agent handles a short sale differently. Make sure you understand how the agent will
handle the short sale.
- Make
sure the listing agent is experienced in short sales or much delay and
disappointment will follow.
Kevin
Vitali is a leader in listing Massachusetts
short sales, who better to represent you in purchasing a short sale
than Kevin Vitali. If you are a homeowner and are considering a short
sale Call Kevin at 978-360-0422 for more information.
