In our market it’s hard to go house hunting without showing a number of short sales. What is a short sale you may ask? Well a short sale occurs when a home sells for less than the total amount owed on the mortgage, offering an alternative to foreclosure. It can often be a bargain for the buyer, but the word “short” has nothing to do with the time involved to navigate the approval process with the seller’s bank.

How does this work? The buyer writes an offer and presents it to the seller who signs the offer which acknowledges that third party approval is necessary. (Third party being the seller’s mortgage company).The mortgage lender has to approve the short sale, and that permission is not automatic or assumed. The seller will need to research the lender’s requirements, and compile a complete package for approval by the mortgage lender. This complete short sale package must be complete and meet the mortgage lender’s conditions promptly.

What factors affect the Banks decision to approve the short sale? Who knows, just kidding. The bank will take a hard look at the seller’s hardship, and whether the hardship is one of the acceptable hardships or merely an excuse to walk. Typically, banks look more favorably on circumstances that are not the “fault” of the homeowner, such as illness, layoff, or divorce. Often part of the “short sale package” includes a hardship letter to the lender detailing the circumstances surrounding the financial problems.

Short sales are popular with buyers because a) there are so many in our market place and b) often they are offered at value pricing. Note that often times maintenance has been deferred by the seller due to financial problems, and most banks have “AS-IS” terms of purchase.

Another item to consider is liens placed upon the property due to sellers financial problems, so title insurance is recommended.

All banks are different, so most importantly, have a back up plan. The approval process for the short sale may take 30 days or several months to get to the closing table.

Setting expectations upfront is the key to keeping the roller coaster short sale experience from becoming a frustrating for both parties. Also note that the Bank seldom meets the deadlines imposed and be prepared that they will not respond to the offer as quickly as either party would prefer.

If you or someone you know needs advice on selling or buying a short sale, call or text me 757-288-0983 or email me at AgentFaircloth@gmail.com. Don’t forget the entire MLS is at your fingertips go to:  http://AgentFaircloth.com to see them ALL!