And if there is more than 1 mortgage on the property, then usually the 2 banks/mortgage holders fight over the amounts as both want the most they can get. Sometimes this amount is only $1000 but the deal is not approved until all parties/banks/lenders agree to the terms. We have dealt with lenders that are impossible to work with (from no way to contact them to not responding to making ridiculous conditions) to smaller banks that seem to want to get the property sold and get rid of the bad debt.
Another thing about short sales is the banks/lenders will not consider a short sale unless the owner is at least one payment late on their mortgage payments. So in the process, the banks are making the owners ruin their credit score. One late mortgage payment is worth about 50 points and the range is from 350-850. You can see this is a huge hit to the credit number. These owners then cannot turn around and buy another property because their credit scores prevent them from getting another mortgage.
We need the short sale properties to get closed but the lenders/banks are making this process worse for everyone involved. If you are a buyer and have the patience to wait a few months to get your deal approved, then go for it as we all need your deals to get done so we can all move thru this mess.
A short sale simply means the Seller will not have enough money from the sale of the property to pay all costs at closing - including the mortgage(s), fees, and commissions. A Seller can still sell their property for less than their mortgage value and not call it a short sale as long as they stipulate that they will bring money to closing to satify all of their expenses.
However, the most common reference to an advertised "short sale" as you would see it on an MLS listing indicates the Seller has made arrangements with their lender to sell the property for less than the amount owed currently and the lender is willing to allow that to happen. The short sale process can be long and frustrating due to the fact that their are TWO parties on the Seller side which must be satisfied: First - the Seller must accept the offer. Second - the Lender(s) must approve the short sale amount. This is where the offer/purchase process generally slows down. Often a purchase agreement which has been accepted by the Seller doesn't make it to the closing.
Are you planning to purchase a property which is a "short sale" or do you foresee having to sell your own property for less than you owe?
A short sale is a situation where the seller attempts to sell their home for less than what they owe the lender on the mortgage. The lender must approve an offer from a buyer and the seller normally has to have a hardship such as loss of income. Short sale situations also usually have many offers and the lender will choose the most profitable. The most important thing you need to do is find a Realtor that is very knowledgeable in short sales. Hope this helps.
In order to do a short sale, the seller must be in a hardship situation and unable to pay their mortgage due to such things as medical bills, loss of job etc. The seller can not have assets that could go towards paying the mortgage due or walk from the sale with any money. The short sale is usually done to avoid a foreclosure. It will affect your credit score, but not as bad as a foreclosure will.