Real Estate Tips: What Is A “Short Sale” And How Does It Work
Short sale happens when someone failed to pay his or her mortgage on time due to some financial difficulties. Instead of opting to a foreclosure, the bank may allow the home owner to turn over the property to them, which will then allow the home to be sold as close to its market value as possible.
A short sale is the kind of sale that happens when the borrower and the lender figure out that selling the property with a moderate loss is a better idea than letting the borrower default on his/her mortgage.
Here are some of the things that you need to know about the short sale process:
First of all, the homeowner will provide info to the bank. The information submitted to the bank should include the home owner’s reason for short selling the property, an authorization letter that authorizes an agent to communicate to the bank, and the home owner’s financial statement.
Once the property is being sold, buyers can make offers like how they would on a regular home. Technically, the selling of the property goes the same way as how it would on a non ‘short sale’ home. Meaning, the seller can accept any offer the property receives.
Finally, the bank makes the decision about the sale. Once the seller decided on an offer, he/she should send the necessary selling information to the bank. The transaction could only be finalized once the bank approves the offer. This process can go for as long as 120 days or as short as two weeks. Furthermore, not all short sales get bank approval. Banks can decline the short sale for various reasons such as underpricing a home or when an agreement clause gets violated.
Buying or selling a ‘short sale’ home means you have to follow the bank’s pace in completing the transaction. An experienced real estate broker could help you understand and deal with the process.