Also, neither every CPA nor every real-estate attorney--just as not every realtor--has experience handling short sales. Plus, the rules keep changing. A couple months ago, no lender would have entertained entering a short-sale negotiation with a borrower who's not behind at least one payment; however, some lenders actually have accepted a few of these transactions. Even people who deal with short sales on a day-to-day basis are finding it difficult to keep up, so it behooves us to share what we know and what we experience with others.
Besides, those who are willing to help others during times like these are usually the ones who will profit when this situation improves, because they will have spent time laying a proper foundation.
Short sales are sometimes looked at as a way to avoid a foreclosure. Some analysts suggest that foreclosure may be a better route for the seller than all the consequences that can result from a short sale - especially the chance that legal action can follow to collect unpaid balances.
Buyers may wait substantially longer for short sales to close. They may also be negotiating with banks and attorneys rather than the homeowner. Buyers may also have to pay for having utilties, etc... turned on to do inspections and then pay to have the home 're-winterized' after inspections.
The best outcome is that a seller is relieved of a property that he/she can no longer afford and a buyer gets a deal. But beware of the pitfalls and seek competant advice at all stages of the process.
A Bank is like McDonalds. And a house is like a Happy Meal (it's even shaped like a house).
You walk into McDonalds and want a Happy Meal which costs $3.
But you only have $2. And BurgerKing has a kids meal for $2 across the street.
But you want a Happy Meal.
So you ask the Manager if he will take $2 for the Happy Meal.
And even though the Manager will be SHORT $1 by selling you the Happy Meal for $2, he agrees to the SHORT SALE, and you only have to pay $2, even though it was $3 on the menu.
The Manager is SHORT $1. This is a Short Sale.
So, the Bank may have a home that has a MORTGAGE for $300,000.
But you are willing to pay the Sellers/Bank only $200,000.
The Bank would be SHORT $100,000. But they accept the SHORT SALE, and sell to you for $200,000. And nobody owes the bank the extra money ($100,000).
If this post answered your questions, GIVE ME A THUMBS UP!
Nate Wolf was recently named a FIVE STAR REALTOR by Charlotte Magazine. He is a top producing real estate sales broker, representing both buyers and sellers. He is a member of the National Association of Realtors, The Charlotte Regional Realtors Association and the Carolina Multiple Listing Services. He is licensed in multiple states and serves all areas of Metro Charlotte from Lake Norman to Lake Wylie and Uptown / Center City to SouthPark and Ballantyne.
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Not all agents know how to appropriately handle a short sale transaction. It is very important on both the listing and selling side to find an agent well versed in short sales. Second, since the seller's mortgage company is being asked to approve the offer, it can take 30-120 days or more for the offer to be approved. Short sales are defanitely not the best homes to place an offer on as a buyer if you have a strict deadline of when you have to move. Also, when a short sale is listed for sale, it is often listed at a very low price to attract buyers (usually multiple buyers) right away. The seller's mortgage company very rarely has anything to do with setting the asking price, so even though you place a full price offer, that doesn't mean you will always get approved. There are many cases when short sale listings sell for well above their asking price because of the mortgage company's demands.
So the summary is: Find an agent who can guide you through the short sale process as a buyer. As long as you are patient and realistic, you might be able to get a great home under market value.