The Short Sale Saga Continues
The big buzz word and trend out there is still the term “short sale.” It seems like every other property for sale falls under the caption “short sale” and a full understanding of the rules and consequences are very unclear. Sometimes to avoid foreclosure, owners are considering the short sale. The short sale definition: a lender allows a property to be sold for less than the remaining balance on the mortgage loan. Sounds simple? Guess again. Basically the short sale is an arrangement between the current owner and the lending bank to accept an offer for less than the total amount that is owed to pay off the property. The lender is “shorted” and this deficiency is the difference between the amount owed and what the bank collects at the short sale. This arrangement can happen in many ways but the definition is still the same. Too many are throwing the term around too loosely taking on other meanings that are just not accurate. Short sale does not mean a property sold under market value, or a foreclosed home, or an owner deciding to lower their price and take less profit. The only way it can be a SHORT SALE is if the lender accepts less and is “shorted.” Most short sales come about when the seller owes more on the property than they can sell it for. At that time the owner tries to make an arrangement with the bank to sell the property for less than is owed. This arrangement differs from bank to bank. Don’t assume anything because each bank does it differently. There are several basic principles that are found common in most arrangements: Short sales are not a “free ride.” The short fall must be accounted for and you do have to show hardship. You should seek advice from knowledgeable professionals. There are attorneys out there specialized in short sales who will guide you through the whole process. The process through the short sale is long and tiring and anything but quick and short. There is much back and forth for the seller as well as for the buyer. Also understand that those working for the bank are not there on the seller’s behalf. They are employed by the lender and their goal is to collect as much money as possible for their employer. Buyers and Sellers need Realtors with short sale experience. This can be a long and arduous road. A Realtor with knowledge can help you expedite your transaction and will also guide you to the ones who will help you the most quickly. Ask questions and have a lot of patience. This is the time for some great opportunities for both sides. Look out for the great deals and take advantage.
by
Susan Koslovsky