Today in the Brevard County FL area there are quite a number of short sale properties being offered for sale. These are houses where the owners owe more than the property is worth in today's market. So, a short sale is advertised at what a selling agent believes to be close to market value. The owner must be in a hardship situation, such as a job loss, a divorce, a death or a military transfer in order to qualify for a short sale.
The short sale process usually begins by a buyer making an offer on the short sale property. If the seller and listing agent feel that the offer is near the list price, then the seller signs off on the contract and the offer is presented to the seller's lender with a complete package of information, outlining the seller's hardship. The lender will determine if it's a true short sale.
The price on a short sale is not a guaranteed, out the door price. The seller's lender must order a brokers price opinion or an appraisal to determine what the value of the house is. The lender will agree to a percentage of the appraised value. The closing costs and the real estate commission must be included in the agreed upon price. If the buyer's offer is not high enough, the short sale lender will make a counter offer. And, the buyer must determine if they will pay more for the property and proceed with the purchase. Then, the buyer's lender will do an appraisal of their own for the buyer's new financing.
The seller's lender can forgive all of the owner's debt, the difference between the selling price of the property and the mortgage balance. Or, they may decide they would like the seller to sign a promissory note, promising to pay back a given dollar amount. Or, the lender can ask the sellers to bring money to closing, which few short sale sellers are in a position to do. The sellers have to decide if they are going to do either of the last two. If not, then the "deal" could be off.
A short sale can take a couple of months or it can take longer. I have closed them in as little as 2 months and one took nearly 15 months to get to closing. It depends on the sellers lender, the sellers situation, and who is facilitating the short sale. It can also depend on if there are two mortgages on the property. If there is a first and a second mortgage, it can make the situation a bit more trying. The lenders must come to terms amongst themselves on how much money each will "settle" on.
Short sales are typically offered in "AS IS" condition. The selling lenders are not always agreeable to repairs on the property. Some are. Some are willing to do repairs to close the transaction.
There are some really nice, attractively priced short sale properties available for sale, today. They can be a great opportunity for the right buyer. Other buyers are not in a position to wait through the short sale process.
I think short sales are going to be around for some time. And, a buyer has to decide if a short sale is right for them.
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Hi Sandy, these are good explanations for any buyer considering making an offer on a short sale. As long as buyers are prepared to be patient, short sales can be a good option for them!
Sandy ~ I believe your right, they are going to be around for some time so we better get used to doing it. Buyers need to be educated before they make a offer. There is a lot more to deal with in these cases.
Sandy
Very informative post, thanks for sharing the information.
Good lck and success.
Lou Luwdwig
Sandy,
Great information and interesting. I saw a blog on which BOA forclosed on a short sale that had been approved and paid for in cash by the new buyer. It took a lot to get BOA to admit their error. Is this something that is common for short sales?
Silvia, A buyer typically has to be in it for the long haul when considering a short sale.
June, I think that education is key in today's market. The more we teach our buyers the more they are able to understand the process and are able to make an educated decision on what they are going to do.
Thanks Lou.
Yolanda, I had one situation recently on a short sale where the lender came 6 weeks after the closing and changed the locks on the buyers house, to take possession of it for a foreclosure. It took about a week to short it all out.