Short Sale SellersInformation on Short Sales
A short sale happens when a total mortgage amount owed on the property is more than the purchase price of a property and the mortgage holder (bank or lender) is willing to accept the purchase price as the “full” payment. Short sales can only occur when the owner can prove a financial hardship and secure a buyer for the property.
Short sales carry more risk than traditional sales as the purchase process is a bit different.
- The short sale seller needs to have the lender approve to lower the mortgage purchase price.
- The buyer will have to apply for a mortgage before the lender will agree to the deal.
- Once all the contingencies are removed, the short sale package is submitted to the lender mortgage for approval and the process can take a few weeks to a few months due to the large amounts of short sale packages being delivered to the lenders.
- Once the mortgage holder approves the purchase price, the bank will expect the buyer to close fast, so the buyer must be in the position to close fast.
The reasons lenders/mortgage holders accept short sales is because they do not want to foreclose (it can be very costly to lenders). They do not and are not in the business of ownign property as they are in the business of lending. If you give them an offer that makes sense, they will be able to work with you. Although many short sale deals fall through because many of the “players” (buyers, sellers, real estate brokers or attorneys) do not understand the process. Negotiating with the bank on a short sale is more than “asking them to accept less”. It takes some skill and patience to get the purchase contract accepted. Make sure to get someone with experience in working with the banks or lenders for short sales.