Home Buying in Shawano>Question Details

Ashley, Other/Just Looking in Shawano, WI

I just looked at a home that is currently in a short sale. What does that mean and how much lower than the?

Asked by Ashley, Shawano, WI Mon Jan 12, 2009

asking price should I offer?

Help the community by answering this question:

Answers

3
Shellie Mathe’s answer
Do not assume that Short Sale means a Deal. It only means that the home is selling for less that the seller owes on it - not necessarily less that it is worth. In the current market a number of home owners owe more than the market value of the home. Contact a reputable buyers agent in your area that can help you determine the value of the home based on market conditions and recent sales not on what is owed on the home. I know that your area is a bit more "unique" in pricing because of the resort type area so you really need to talk to a local agent. I serve on several Realtor committees with some of you agents. If you want to contact me I will give you some names. shellie@matheteam.com.
0 votes Thank Flag Link Sun Feb 8, 2009
To answer your question here is the Wikipedia definition of short sale:

In real estate, a short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold.[1] In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Most Short Sales leave a deficiency balance for which the Mortgagor / Borrower is still liable. In 99% of all cases it is not a settlement-in-full. A deficiency balance will remain while the mortgage broker, real estate agent / broker, loan officers, title and closing agents retain their profit. No regulatory agency governs this hybrid transaction.

Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.

A short sale typically is executed to prevent a home foreclosure. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Short sales are common in standard business transactions in recognition that creditors are not doing debtors a favor but, rather, engaging in a business transaction when extending credit. When it makes no business sense or is economically not feasible to retain an asset, businesses default on their loans (called bonds). It is not uncommon for business bonds to trade on the after-market for a small fraction of their face value in realization of the likelihood of these future defaults.


Please be aware that these type of sales take time and can be frustating but if everything works out in the end you probably will have made a good deal. Have the agent your working with advise you on what to offer. There is not a set number that the bank will take.

I hope that helps.

Lana Stollenwerk
715-212-6753
Coldwell Banker Action
Web Reference: http://WausauAreaHomes.com
0 votes Thank Flag Link Mon Jan 12, 2009
Ashley, short sale simply means that the home is being offered for sale at a price that is below the balance of what is owed on the outstanding mortgage(s) of the current owner. That does not however mean that the sale of the home will be accepted as the mortgage holder(s) has the final say as to how much they are willing to accept for the property. So far as your offer you should seek out a good local buyer's agent and review recent sales of homes in the area comparable to the one of your interest. If you have any interest in trying to purchase a home via a short sale be sure that you have a Realtor experienced in short sales and a Real Estate attorney helping you and guiding you through the process as it is a complicated one and you need to understand your risks.
0 votes Thank Flag Link Mon Jan 12, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer