Short Sale Home » General Short Sale Info » Real Estate Short Sale Myths and Misunderstandings

A short sale happens when the current value of a property falls below than the amount owed.  THe homeowner has suffered hardship, making it difficult for them to pay for the mortgage.

Here are a few myths explained based on experiences of realtors dealing with lenders.

Short sales take forever, as long as 6 to 9 months: If a short sale is handled properly it doesn’t have to take all year for the short sale process to be completed.  It should and should take at least 60 days.  Today, lenders are more equipped to handle short sales due to systems in place.  Of course, the listing agent needs to be aware of the process of the ank and needs to know what to ask of the bank to have it complete quickly.  The short sale package must also be completed fully,neat and received by the lender.  A good cover letter always helps.

The homeowner has to be behind on mortgage payments: While many homeowners are behind on their mortgage when they try to sell their home as a short sale, they do not have to behind on the mortgage.  They just need to show they are experiencing a hardship and cannot afford the home no longer.

The home needs to be on the market for 90 days: Most lenders want to see the home on the market for 90 days for them to agree to a Deed in Lieu of Foreclosure.  Although it is most important to have a hardship letter, an offer and the complete package delivered to the bank.

The lenders will cut the commission: Many lenders will have a set commission for short sales.  Most lenders will pay 5% and some will even pay 6%.

Short sales are too hard: Nothing is easy in the real estate business.  While short sales are not hard ,they take quite a bit of patience, sweat, and perseverance.

The contract is between the buyer and lender: A short sale contract is really between the buyer and seller with a huge continency that the lender needs to release the lien in order for the buyer to purchase the seller.  Thus the lender has control, but the buyer and seller are the parties on the contract.

Tags: deed in lieu of foreclosure, hardship letter, lenders, mortgage payments, real estate