Short sales take more time because the bank has to approve the sale. Many banks are backed up right now and it can take 3 to 6 months for the transacton to get completed.
Most times buyers are not responsible for any money owed by the seller, but in some cases the bank may make it part of the negotiations. Some examples are HOA (home owner association dues) back taxes owed, repairs required by the city before closing things like this. Again it's not very often but it can occur.
In Short (Ha) a short sale is usually when a property is on its way to foreclosure but the seller wants to try and save his/her credit with the lender and works out with the lender a sale of the property at a reduced price though usually not too far from the camparative price to sell the property even though it will not fulfill his/ her mortgage. I other words the seller is upside down in the mortagage and wants to work out a deal with the lender. It usually takes 4-12 weeks and must go through the loss mitigation committee of the lending institution. in many instances the seller may sign several contracts with the contingency that the lending institution has the final approval. This may call for the contract with the least amount of contingencies and the highest offer ( could be more than the asking price). Hope this helps
Great questions! I will go in order of your questions. Yes, the buyer MAY be libel for additional costs, the real answer is it depends!!! If the listing agent informs the seller to continue to pay HOA, and taxes your good, otherwise, buyer beware - but the good news is, it may be a smokin deal!!! Do your research with a qualified agent who can get you the answers!! Do not be afraid of shorrt sales!!! Hidden costs mean something came up at the last minute your were not aware of, right? Short sales really do not work that way. You receive a letter from the bank outlining the details, you proceed or you pass. They are listed as short sale, because the seller is "short" the total payoff (they owe more than the house is worth in todays market). This is usually due to a loan that adjusted and the payments got higher. Good Luck!!!
Short sales have become common due to the dramatic drop in home prices, and the fact that many homes were sold with small down payments so the owners don't have much equity in the property.
The problem of short sales that buyers need to be aware of is that the lender approval process (i..e. agreeing to accept less than the full value of the loan) can take awhile.
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Means the seller is selling the property for less than mortgage balance lender has to approve all sales offers.
There is drama involved with short sales and foreclosures
If you are trying to meet the 4.30 deadline date $8K tax credit best search for homes w/o bank approval.
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
Hope this helps and good luck :)
â€¢ Lender's consent and approval required.
â€¢ The lender accepts the sale as payment in full for the loan.
â€¢ The property owner escapes foreclosure, but receives no funds from the sale
â€¢ There can be no equity in the property
â€¢ Seller cannot bring money to the closing.
â€¢ Lender does not report foreclosure to the credit bureaus.
The lender will require various documentation. The incentive for the lender is to remove the account from their books before the loan becomes a problem. It can also cost a lender $25,000 to as much as $50,000 in order to send the property through the foreclosure process. Technical requirements for a short sale: (May differ from lender to lender)
â€¢ Owner must demonstrate hardship/financial insolvency (i.e. loss of employment, illness, divorce, catastrophic illness, death of a spouse).
â€¢ Seller must prepare a hardship letter asking lender to accept short sale.
Documentation that may be required by lender to determine if owner qualifies for a short sale.
â€¢ Listing agreement with Realtor showing the property is on the market for sale.
â€¢ Comparable market analysis which includes sales and listings
â€¢ Bank statements
â€¢ Pay stubs
â€¢ Tax returns
â€¢ Purchase/Sale Agreement
There are drawbacks to the short sale.
â€¢ A deficiency balance could be charged off which could result in negative credit bureau reporting.
â€¢ If the cancelled portion of debt exceeds a certain amount, the homeowner is required to report the forgiven amount as income on his or her tax return.
As always, any property owner should seek legal and financial advice before entering into this type of transaction.
If you would like more information on Short Sales, please contact me.
Tammy Hayes, Realtor, Sandals Realty, 941-276-6185 email@example.com
A short sale is the sale of a property in which the seller is in distress. This is normally caused by a change in income resulting in the need for the owner to sell the subject property. In view of the fact that real estate values have been radically dropping over the past several years the sale of the home becomes compromised by the fact that the homes value is much less than the amount the owner owes on it.
When this scenario exists, many home owners approach their lender requesting to sell the home for less than the amount owed on it. Thus, a short sale.
There are many twists that can occur along the way during the purchase of a "short sale" property including: delays, lack of information, frustration, months of waiting(4-9 months is common) and in the end great disappointment. However, these trials can be overcome with a successful closing and owning the home of your dreams.
We are local....feel free to contact us directly with additional questions or concerns. 941-408-5363.
Michael Saunders & Company