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Lets Talk Short Sales…
By Tina Bass | December 4, 2009
First, everyone needs to understand what a “short sale” is:
A homeowner has a mortgage with a lender and sometimes a second lender. With the economy now in its state, said homeowner can no longer pay his mortgages and is delinquent on his/her payment. The property values have also declined so the owners property is no longer valued at what he/she bought it for. The homeowner will contact their lender and start negotiating their options. Unfortunately, all that can be worked out is the short sale, where the lender and homeowner agree to sell the property for below what is owed on the mortgage, hence selling “short.”
Here are a few things you should know before you decide to make an offer on a short sale property:
- Short Sales Want Quick Closes: Though the short sale approval process may take anywhere between six to nine months, once the sale has been approved the bank typically will want to close within 10-30days (depending on the financing terms).
- Obtain Credit Approval Before Making An Offer: Most banks will want proof of funds to be submitted with the offer, so get a preapproval letter or proof of funds letter from your mortgage company or bank.
- Don’t Get Attached To The Property: Even after you have an accepted offer there is still much work to be done. You will need to have the home inspected and the lender will order an appraisal. Here we go back to the current market conditions, sometimes these sales are on the market for several months, in this time the property has again lost value. If you are financing than this will indeed impact your deal. If the property can’t appraise then your lender will deny the loan.
- Do Not Get Mad At Your Realtor: If you’re purchasing a short sale through a REALTOR®, please know that they are working as hard as they can for you. Many times Buyers get frustrated with their real estate agent since updates on the short sale approval process is few and far between. We work many short sales are are typically given an update once a month… that’s it. No matter how many times we call in each week we get the same answer.
I do hope this helps answer a few of your questions about the short sale process.
Tina Bass
REALTOR®
The Miller Team
(850) 691-9822
tina [at] 2millers [dot] com
Disclaimer: This post is not intended to be or provide legal advice. We recommend that you speak to your attorney and your tax accountant regarding specifics and to find out if this is the best option for you in your situation.
[image credit: Flickr]
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