What is a Short Sale? Short Sales Explained

Short Sale

The difficult real estate market along the South Carolina coast and the rest of the country has led to short sales becoming more common nationwide. Whether you are considering buying a short sale home or condo, or need to complete a short sale to sell your home, it is important to understand what the process entails and how to increase your chance of a successful transaction.

What Is a Short Sale?

In brief, a short sale occurs when the lending institution allows a home to be sold for less than the mortgage amount. Up until 2007 to 2008 home prices had consistently gone up around the country for over a decade as the housing market boomed. Low interest rate financing was easy to get and plentiful up until the bubble popped and the boom became a bust. Many people bought their home at the peak of the market, only to find home prices rapidly decline after their purchase.

This created a situation where many homes across the US were worth less than the mortgage used to purchase the home. As many people lost their jobs due to a struggling economy, it became hard for them to make their payments, which means the banks and lending institutions had to decide between foreclosing on the homeowner and allowing a short sale.

Tips for Buying a Short Sale

As real estate values declined many people who have been priced out of the market can now afford to purchase a home that is a short sale. Unfortunately, this process can be agonizingly slow, so there are a few things that you should do to give yourself the best chance of being able to buy a short sale home for a discount.

Find a Realtor with Experience – The rules for short sale are changing all the time. As the national and local governments work to make the process easier for homeowners and lending institutions begin to realize that they can reduce their losses by allowing a short sale instead of a foreclosure, short sales are becoming more common. The problem is that few realtors have true in the trenches experience on closing a short sale transaction other than attending a class on the topic. Find someone that is up-to-date on the latest short sale rules and regulations, so that you have the best chance of a successful transaction.

Be Patient – A successful short sale can take many months to complete. Patience and dedication are required to see this process through to its end. The reward for your diligence is that you could purchase a home for far less than what you would normally be able to find on the market.

Get an Inspection – Once the seller has gotten permission from the bank to go ahead with the sale, you should get a home inspection completed. You will find some short sales in immaculate condition and move-in ready, but a more common occurrence is that financial hardship has led to deferred maintenance on the home. Understanding any repairs that are needed before completing the purchase is essential to negotiating the right price.

Gauge the Seller’s Involvement – Most of the upfront work required to complete a short sale falls on the shoulders of the seller. They are the ones who have to repeatedly follow up and submit paperwork to the lending institution as it decides whether or not they will accept a short sale on the home. A seller who is not motivated can easily allow the situation to drag on, which means it might be a better idea to find someone who is working hard to meet the bank’s requirements and sell their home.

Ultimately, a short sale can be beneficial to everyone involved in the transaction. The seller is able to get out from under a loan that they cannot afford any more. The buyer gets a great deal on a new home that is more in line with the current real estate market. The lending institutions, while taking a loss on the first loan, are able to recoup some of their investment and eliminate the need for the far more expensive and time-consuming for closure process.

You must know how to find a realtor who knows how to market a property in order to sell your house. worldclassre.com presentation is a must-see if you want to sell a house for the best price in today’s housing market. When choosing a realtor, you must realize that most do not know who to market a property beyond the usual MLS tactics. Learn a lot from this presentation and also get free reports including “10 Questions to Ask; How to Find a Realtor who Knows How to Market a Property” and a Market Trend report in the area of your Florida property. http
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Why do Banks Prefer Short Sale

Why Do Banks Prefer Short Sale?

Banks as an institution are in the business of making money. They make money for you but mostly they are in the business for making a profit for themselves.

Recovering losses

With the slump in the market after 2007, it has been increasingly difficult to balance books. As more and more homeowners are finding it difficult to meet their mortgage payments, banks are incurring tremendous losses. Losing jobs, increasing expenditure is adding to the burden of homeowners and making its way towards loss for banks. After examining all the avenues letting go of the house to recover losses both for the bank and the borrower seems to be the only solution. If an individual is defaulting on payments, banks have to recover their losses the best way they can. Out of the various possible options short sale and foreclosure are two ways the bank can recoup its lost money.

Why Short Sale

Lets us be clear that bank does not want to own your house. Its sole goal is to get its money back. Bank short sale is a fast process both for the homeowner and for the bank. Banks are preferring short sale of properties these days due to many reasons. Since the primary concern is money, if a bank gets an offer close to the fair market value of the house, the bank will prefer short sale rather than foreclosure. There are many reasons for this which are discussed subsequently.

Time

The entire process of foreclosure comes with many long drawn out legal issues depending on the concerned State. Foreclosure is time consuming, as in certain states the whole legal process takes months to complete before bank can actually foreclose a property. Moreover, Banks have to hold the property for some more time to grant