What is A Short Sale?

 

    A Short Sale is when someone owes more on their mortgage(s) than they can clear from the sale of their property.

We dealt with lots of Short Sales in the early 90’s, but at that time, generally homeowners expected to have to come up with the cash to close. It was not easily done, but only 15 years ago, Americans – by and large – understood when they took out debt it was their responsibility to pay it off.

     Today, homeowners are attempting to negotiate with the banks to get the banks to “eat” the difference. If there has been a true hardship, and the consumers can not continue to make their mortgage payments, banks are agreeing to forgive that debt, or at least a portion of it, with increasing frequency.

Are Short Sale Properties a Deal?

     This is the question I’m asked buy more and more buyers.  In my opinion a short sale is more of an adjustment based on market conditions.  What the seller paid for the home when they bought it may be 10-12% higher than the market will bear today.  A bank approved short sale is an attempt to get the property sold at a more competitive price before it goes into foreclosure.  Once the home is foreclosed on you can often get it for less, However in some cases you can get an excellent deal on a short sale.

Warning about short sales!

     The biggest warning I can give any buyer about purchasing a short sale is be patient.  Short sales do not happen fast!  Why?  The bank must approve all offers and banks are swamped with these types of properties and are understaffed to deal with them.  It can take a minimum of 4 weeks to even get a response to your offer on a short sale property.  I have heard of many cases of buyers waiting 3-4 months or more.  If you need to buy a house with any urgency a short sale should not be considered.

If you have any additional questions about short sale properties or you would like a list of short sale homes in your area be sure to contact me.  You can post your questions and comments right here on my blog!