Why would someone do a short sale? A short sale is when a home owner sells his or her property for less than the amount owed on their mortgage. Typically, the bank or lender agrees to a short sale in order to recoup a portion of the mortgage loan owed to them. Short sales are becoming increasingly rare as the economy improves.
Who benefits from a short sale? For the seller, a short sale presents less damage to his credit report than a foreclosure, and allows him to recover and buy a new house more quickly. This sense of cooperation between the seller and buyer may facilitate the exchange and get the new owner into the house more quickly.
What is the purpose of a short sale? Homeowners pursue a short sale when they can no longer pay the mortgage, need to move from the property and want to avoid a foreclosure. With a short sale, the impact on the homeowner’s credit record might not be as bad as a foreclosure in some circumstances.
What does a short sale mean for the buyer? A short sale is a real estate transaction where the owner’s lender agrees to accept a purchase offer from a new buyer, short of what is owed by the original owner. So if you’re in the market for a new home, there’s a good possibility that you’ll fall in love with a home that’s listed as a short sale.
Why would someone do a short sale? – Related Questions
Is short sale good for buyer?
In short, short sales are a good idea if you have plenty of time and money. A short sale buyer may get the property at a reduced price, but the property (in all likelihood) has its share of problems — think “fixer-upper” — and the deal needs to go through considerable red tape to make it happen.
How long does it take for short sale to close?
Mortgage lenders prefer to close short sales within 30 days or less after approving buyer offers. In fact, lenders often push for closing short sales within two to three weeks of sale approval.
Why buying a short sale is bad?
If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. You’ll also walk away from your home without a penny from the deal, making it difficult for you to find another place to live. However, a short sale can forestall foreclosure and its negative impact on your credit.
How long does a short sale take 2020?
Short sales usually take longer than regular home sales. It’s rare for a short sale to close within 30 days. If you want to sell your home as a short sale, you’ll need a good Realtor to help keep the new buyer motivated so they don’t want to give up on the home due to a lengthy sales process.
What happens after a short sale is approved by the bank?
After accepting an offer, the homeowner or his realtor must forward the offer to the lender for review. If the lender approves the offer, the short sale moves forward. If the lender does not accept the offer, the buyer may counteroffer or end the process.
Are short sales cash only?
A short sale means they won’t earn any profit from the sale of the house – the bank or mortgage lender gets all the sales proceeds.
Why are short sales so difficult?
Short sales happen because the loan on the property is larger than the sale price minus all the sale expenses. With a short sale, the seller is asking the bank to take less than the amount owed. The seller’s bank must approve the sale, and this is where the big delays can happen.
Can you finance a short sale home?
A short sale is a foreclosure prevention method. Unlike a foreclosure, the property is still owned by the seller. Financing a short sale is possible, provided you and the lender are willing to wait.
Why might a buyer get a great deal on a real estate owned property?
It’s safe to assume REOs are free and clear of government and municipal liens, HOA liens, tax burdens and anything else that could impede an impending transaction. Those buying REO properties will usually be able to do so with a clear conscious, and an even clearer title.
Can a seller back out of a short sale?
Here are ways a seller can cancel a short sale contract: A seller may decide to cancel the listing, and the listing agent will agree. A foreclosure may take place, preventing the short sale. The seller may be able to accept a higher offer and cancel the first offer.
How can I speed up a short sale?
Speed up your short sale closing date by making your offer as free of contingencies as possible. Submit your mortgage approval with the offer. Contribute a substantial deposit to show your good intentions.
Can you withdraw an offer on a short sale?
When you make an offer to buy a short-sale listing, the sellers must accept your offer, forming an actual, binding contract, before it can be submitted to the bank for review and approval (or not). So, yes, you can withdraw your contract on this short sale and move on to another property.
Why do banks prefer foreclosure to short sale?
It costs more to the lender to go through the foreclosure process. During a short sale, the lender shares the cost with the homeowner to quickly sell the home. From a financial standpoint, many lenders prefer a short sale if the home is not expected to sell for more than the balance due at the foreclosure auction.
Can you use FHA on short sale?
A short sale occurs as a compromise between a seller and her own lender. A seller who cannot make payments must face foreclosure or an alternative change in the loan. However, there is little preventing a buyer from using an FHA loan to purchase a short sale house.
Why do short sales take so long?
When an owner applies for a short sale, the lender will ask for a ton of paperwork. Sometimes it seems that the lender asks for more paperwork in a short sale than when the borrower took out the loan. And the more money the lender will lose, the more time it may take to process and approve the short sale.
How long does it take for a bank to accept a short sale offer?
The short sale process, from submission to short sale approval, is generally as follows: Submission of offer and complete short sale package from the seller. Bank acknowledges receipt — 10 to 30 days. Bank orders a BPO or appraisal — 30 to 60 days.
What happens after a short sale?
After the short sale is completed, your lender might call you or send letters stating that you still owe money. These letters could come from an attorney’s office or a collection agency, and will demand that you pay off the deficiency. Your lender or the collector might even try to intimidate you into making payments.
Do banks counter offer on short sales?
The bank can also ignore the short sale and put the home in foreclosure. The offer has to be accepted by the lender as well as the seller. If the lender doesn’t accept the offer, they have the ability to counter the offer.
What happens if a short sale is denied?
An incomplete file typically means the documentation that the bank is requesting from the seller has not been obtained in a timely manner or is incomplete. If this documentation is not met, a short sale lender will deny a file and make the listing agent, title attorney and seller start all over again.
What is the downside of a short sale on a home?
Disadvantages of a Short Sale
A short sale comes with quite a few catches. There are more parties involved than a typical sale making the process complicated and often lengthy. In a traditional home sale, price negotiations happen between the buyer and seller (or their representatives), not the seller’s bank.
Why are foreclosures cash only?
Buying your foreclosed property with cash: A cash purchase means you won’t have monthly loan payments, and will avoid the interest expense and closing costs involved with financing. You may be able to negotiate a faster closing on your home because you can eliminate the additional time involved in obtaining financing.