Short Sale SellersHow Short Sales Work
The short sale timeline can be a confusing one to all parties involved, especially the short sale buyer.
When a lender agrees to accept less than what is owed on the mortgage, it is called a short sale. The homeowner owns the property and selling it but the bank still needs to approve the sale and the asking price. There are no longer a buyer and seller in this real estate transaction, but a buyer, seller and the bank.
In most cases the property is sold “as is” but a buyer can still perform an inspection. The buyer will also need to pay for their own appraisal via their bank but the seller’s lender will also have an appraisal done. The final decision on price will be determined by the bank approving it on the BPO (broker price opinion) of the house. Sometimes the bank will come back with a counter offer for a higher price.
The time to close a short sale can range from anywhere as 6 weeks to several months. The buyer must be prepared to wait when buying a short sale.
Purchasing a Short Sale and its Risks
There could be a number of things wrong with the property if the property owner neglected maintenance to the property such as a leaky roof, old furnace or overgrown landscaping.
Buyers of short sales pursue these homes to get a good deal. But sometimes due to bidding wars, they aren’t such a great deal. Make sure you do your homework before overbidding for a property.
How Much To Offer On A Short Sale
Short Sale Pros and Cons
Short Sale Timeline
Get an Agent with Short Sales Experience
It’ll work strongly in your favor to get a real estate agent with short sale experience. They will be able to expedite your transaction and protect your best interests. You don’t want to miss any important details due to inexperience which could be costly to you.
Earnest Money and Short Sales
Short Sale Addendum
Biggest Issues with Short Sales
Home Qualification
The lender needs to agree to the short sale. Sellers will need to provide a hardship letter and a short sale package to the bank or lender. The bank’s loss mitigation department will handle the account and be in contact with the seller’s agent.
Countrywide Short Sale Process
Short Sale Owner Must Qualify
Sample Hardship Letter
Submit a Purchase Offer to the Lender
Once the seller has accepted your offer, send it to the lender for approval. The lender will want to see you’ve been approved for a loan.
10 Steps to Buying a Short Sale
How To Buy a Short Sale
Top Reasons Why Banks Reject Short Sales
Allow the Short Sale Lender Time to Respond to Your Offer
Your offer on the short is contingent on the lender’s acceptance. The timeline for response can take a short or very long time as they are under no pressure to make a decision and are currently overloaded with short sale requests. Some lender must submit short sale to a committee for approval and a decision cannot be made until a 2 or 3 weeks later at minimum.
Short Sale Lender Package
Why Banks Take So Long
Doing Short Sales with Lenders
Make Sure You Have a Home Inspection
Lenders will typically not pay for any fixes so make sure you perform a home inspection as the home will be sold “as is”. You want to make sure you know what you are getting into, so don’t waive the right to obtain these inspections and make your short sale offer contingent on approving them.
Short Sale Time Contingency
Managing Expectations for Short Sales
Typical Short Sale Transaction