A short sale, also known as a pre-foreclosure sale, is when you sell your home for less than the balance remaining on your mortgage. If your mortgage servicer agrees to a short sale, you can sell your home and pay off a portion of your mortgage balance with the proceeds.
How to buy a short sale home?
- Find a short sale home. Given the complexity and risk associated with short sales,we don’t recommend going it alone unless you have plenty of prior experience.
- Get pre-approved for financing. Unless you’re paying for a short sale property with cash,your first step is to get pre-approved for a mortgage.
- Make an offer. Your third step to buying a short sale home is to make a competitive offer.
- Negotiate the short sale and contingencies. You and your agent should also prepare a short sale addendum with certain contingencies.
- 1 Is it a good idea to buy a short sale house?
- 2 What does a short sale mean for the buyer?
- 3 Why is a short sale bad?
- 4 Who benefits from a short sale?
- 5 Are short sales cash only?
- 6 Can you negotiate a short sale?
- 7 Is it better to do a short sale or foreclosure?
- 8 How long does it take to close on a short sale?
- 9 How do you win a short sale?
- 10 Who pays realtor in short sale?
- 11 Can you finance a short sale?
- 12 Can you buy a short sale with an FHA loan?
- 13 Can a seller back out of a short sale?
- 14 What Is A Short Sale?
- 15 What Is a Short Sale?
- 16 What Is a Short Sale?
- 17 Short Sale vs. Foreclosure
- 18 How Does a Short Sale Work?
- 19 How to Buy a Short Sale Property
- 20 Why Lenders Do Short Sales
- 21 Why Homeowners Do Short Sales
- 22 3 Things to Consider Before Buying a Short Sale
- 23 Find a Short Sale Expert!
- 24 What Is A Short Sale?
- 25 What is a short sale?
- 26 Is a short sale the same as a foreclosure?
- 27 Who benefits from a short sale?
- 28 Should I sell my home through a short sale?
- 29 How long does a short sale take?
- 30 How often do short sales fall through?
- 31 Steps to buying a house through the short sale process
- 31.1 Step 1: Identify potential short sales
- 31.2 Step 2: View the property
- 31.3 Step 3: Do your research
- 31.4 Step 4: Find all liens and mortgages
- 31.5 Step 5: Figure out the financing
- 31.6 Step 6: Contact the lender
- 31.7 Step 7: Complete the lender’s short sale application, if they have one
- 31.8 Step 8: Assemble the proposal
- 31.9 Step 9: Negotiate the terms
- 31.10 Step 10: Seal the deal
- 32 Common mistakes short sale buyers make
- 33 7 Potential Risks of Purchasing a Short Sale
- 34 1. Long Process
- 35 2. Subject to the Mortgage Lender’s Approval
- 36 3. Lender Could Counter, Reject or Not Respond
- 37 4. Opportunity Cost
- 38 5. Property ‘As Is’
- 39 6. Is the Seller Approved?
- 40 7. Lenders Prefer All Cash or Large Down Payments
- 41 The Drawbacks of Short Sales for Buyers and Why You Should Be Wary
- 42 Short Sales Don’t Mean a Discount
- 43 Agents Might Be Pushing the Sale
- 44 Homes Sell As Is, at Market Value
- 45 It Can Take Longer to Close
- 46 Lender Commissions and Higher Closing Costs
- 47 There’s No Control, and Sellers Aren’t Motivated
- 48 The Bottom Line
- 49 Frequently Asked Questions (FAQs)
- 50 How long does a short sale stay on your credit report?
- 51 The Short Sale Explained
- 52 What Is A Short Sale In Real Estate?
- 53 How A Short Sale Works
- 54 Short Sale Benefits And Drawbacks For Sellers
- 55 Short Sale Benefits And Drawbacks For Buyers
- 56 Foreclosures Vs. Short Sale Homes
- 57 The Short Sale Process: Step By Step
- 58 The Bottom Line:Understanding Your Options
Is it a good idea to buy a short sale house?
In short, short sales are a good idea if you have plenty of time and money. A short sale buyer may get the property at a reduced price, but the property (in all likelihood) has its share of problems — think “fixer-upper” — and the deal needs to go through considerable red tape to make it happen.
What does a short sale mean for the buyer?
Written by. Sarah Davis. A short sale is a real estate transaction where the owner’s lender agrees to accept a purchase offer from a new buyer, short of what is owed by the original owner. This could be great for you, the buyer, but it could take a long time to move into your home.
Why is a short sale bad?
If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. You’ll also walk away from your home without a penny from the deal, making it difficult for you to find another place to live. However, a short sale can forestall foreclosure and its negative impact on your credit.
Who benefits from a short sale?
For the seller, a short sale presents less damage to his credit report than a foreclosure, and allows him to recover and buy a new house more quickly. This sense of cooperation between the seller and buyer may facilitate the exchange and get the new owner into the house more quickly.
Are short sales cash only?
No cash -out A short sale means they won’t earn any profit from the sale of the house – the bank or mortgage lender gets all the sales proceeds.
Can you negotiate a short sale?
Can You Negotiate A Short Sale? It is entirely possible to negotiate a short sale, but doing so can be a time-consuming process. Instead of negotiating with the seller alone, as is the case with most traditional sales, short sale negotiations must be approved by the lender, too.
Is it better to do a short sale or foreclosure?
A short sale transaction occurs when mortgage lenders allow the borrower to sell the house for less than the amount owed on the mortgage. The foreclosure process occurs when lenders repossess the house, often against an owner’s will. Furthermore, a short sale is far less damaging to your credit score than foreclosure.
How long does it take to close on a short sale?
A short sale can take up to six months to be approved because many factors can slow the process down. You might be able to reduce the time it takes to be approved by asking your agent for some information before making an offer.
How do you win a short sale?
How to Make a Short Sale Offer
- Offer a Strong Earnest Money Deposit.
- Check the Comparable Sales.
- Don’t Ask for Special Reports or Repairs.
- Give the Bank Some Time.
- Assure the Seller You’ll Wait.
- Offer to Pay the Seller’s Fees.
- Shorten Your Inspection Period.
- Provide a Strong Preapproval Letter.
Who pays realtor in short sale?
While a seller typically pays all real estate agent commissions and other closing costs, in a short sale the seller pays nothing; the lender or bank foots the bill.
Can you finance a short sale?
A short sale is a foreclosure prevention method. Unlike a foreclosure, the property is still owned by the seller. Financing a short sale is possible, provided you and the lender are willing to wait.
Can you buy a short sale with an FHA loan?
A short sale occurs as a compromise between a seller and her own lender. However, there is little preventing a buyer from using an FHA loan to purchase a short sale house.
Can a seller back out of a short sale?
Here are ways a seller can cancel a short sale contract: A seller may decide to cancel the listing, and the listing agent will agree. A foreclosure may take place, preventing the short sale. The seller may be able to accept a higher offer and cancel the first offer.
What Is A Short Sale?
Although the stages needed in a short sale are fairly similar to a typical contract, the process is more difficult because of the lender’s participation. The conventional house buying process only asks the seller to transfer their equity to the buyer in return for the agreed-upon acquisition price. However, in a short sale, the transaction is in the hands of the lender, therefore the procedure tends to be more time-consuming and confusing. The following six processes demonstrate the key distinctions between a short sale and a regular transaction.
Step 1: Get Approved For Financing
The first step in purchasing a home, like with any other major purchase, is being approved. While obtaining preapproval before making an offer is usually useful for purchasers, it is especially critical in the case of a short sale, as the lender will want to confirm that the new buyer is financially capable of acquiring the short sale property. With Rocket Mortgage®, the approval process is simple, fast, and convenient for all parties involved. The process may be completed entirely online by completing an application and giving us permission to verify your credit score while also disclosing details on your current income and assets.
Consider your alternatives once you’ve presented paperwork regarding your income and assets.
Step 2: Get A Real Estate Agent And Find A Home
Finding a property takes time in any situation, but it’s even more difficult when your heart is set on obtaining a short sale. Instead of combing through all of the available listings in your target location, narrow your search to preforeclosure property listings on the internet. By contacting the county court in your area, you may also do a search of public records. A short sale can be difficult to identify and navigate, but an experienced real estate agent can guide you through the whole process.
Step 3: Do Your Research
Before making an offer on a home, you should gather as much information as you can on the property. You’ll want to start by looking at recent sales in the neighborhood to determine the true market worth of the house you’re considering buying. As a result of their access to the Multiple Listing Service (MLS), real estate agents are a great resource for estimating the worth of a house. The MLS gives information about the prices of properties currently on the market as well as those that have recently sold.
Before you acquire a short sale, you must ensure that you are aware of every individual or entity who may have a claim to the property in question (these are called lienholders).
As a result, you should double-check that there are no additional liens against the property. You can obtain this information by contacting the seller, their agent, or your lender. However, you should also hire a title firm to conduct a title search on the property just to be on the safe side.
Step 4: Make An Offer
When making an offer on a house, you must evaluate what the lender will think of your offer based on your knowledge of local home prices and the current market conditions. Even while you may be considering a short sale as a strategy to save money on your house, bear in mind that the lender is still seeking to reclaim as much of the outstanding mortgage debt as possible – and that the offer must match investor requirements in order for it to be accepted. It is essential that your offer be competitive with the market value of the house if you want it to be approved.
If a seller invites you to pay money under the table in exchange for the option to apply for a short sale, decline and file a complaint with the authorities immediately.
Step 5: Have The Home Inspected
Short sale homes are offered “as-is,” which means that if there are issues with the property, you will not be able to negotiate a reduced purchase price with the seller. You should, however, be aware of the state of the house you’re considering purchasing before making a final decision to purchase it. While the seller is obligated to disclose any known faults, it is possible that this information will slip through the cracks throughout the transaction. Make sure to get a house inspection performed so that you are aware of what you are getting yourself into.
Step 6: Close On The Property
Even after the lender has agreed to the short sale, you must make certain that the lender and any other lienholders are prepared to release the collateral in exchange for the money. The greater the number of lienholders, the longer this procedure is likely to take. The seller must additionally supply the following paperwork in order for the transaction to be completed:
- A hardship letter is a letter in which the seller describes their financial difficulties and explains why they are unable to make further mortgage payments.
- Proof of income and assets: The seller must supply at least two years’ worth of bank records and tax paperwork to demonstrate his or her financial standing. This material must demonstrate that the seller does not have the necessary finances to pay off their remaining obligation.
- List of liens: While some sellers may only be in debt as a consequence of their principal mortgage, others may be saddled with a slew of extra obligations. The seller is required to furnish a current list of any liens against the property.
- When a lender demands to see a list of similar properties that are currently on the market and have sold within the past six months, it is to demonstrate to the lender that a seller owes more on the property than it is worth.
After you’ve received the permission letter and all of the necessary papers, you’ll be able to close on the property and receive the keys to move into your new home.
What Is a Short Sale?
Perhaps someone has advised you to avoid short sales, or perhaps you’ve heard that they’re a terrific deal. Whatever you’ve heard, the ultimate reality is that purchasing a short sale house is a time-consuming and difficult procedure. In reality, only a small percentage of short sales are completed within 30 days. Whether or whether it is worthwhile to put in the extra effort will depend on your own circumstances. Before you make a snap decision on a home that appears to be “too good to be true,” you should familiarize yourself with the short sale procedure and consult with your real estate agent for further information.
What Is a Short Sale?
An example of a short sale would be the sale of a real estate property for which the lender is ready to take less than the amount of money still outstanding on the mortgage. In order for a transaction to be classified a short sale, the following two conditions must be met:
- The homeowner must be so far behind on their payments that they are unable to make up the difference. The housing market must have suffered a significant decline to the point that the house is now worth less than the remaining balance on the loan.
A short sale will almost always be attempted by the lender (together with the homeowner) in order to prevent foreclosure in the majority of circumstances. Find knowledgeable real estate agents to assist you with your house purchase. In general, there are a lot of misconceptions about the short sale process. Nevertheless, a prevalent misperception is that lenders are just concerned with getting rid of the property and would act rapidly to recover as much money as possible. In truth, the lender will take their time in order to recoup as much of their loss as they possibly can from the default.
However, just because a property is advertised as a short sale does not imply that the lender will be required to accept your offer, even if the seller does. This is one of the factors that makes the short sale procedure so difficult.
Short Sale vs. Foreclosure
A short sale or a foreclosure are both difficult options for sellers who wish to get rid of their house mortgage debt as quickly as possible.
In a short sale, the homeowner is the one who makes the decision to sell their home. In order for a short sale to be successful, the home’s value must be less than the amount owed by the homeowners, and they must be so far behind on their mortgage payments that they do not believe they will be able to make up. During the short sale process, potential purchasers will interact with the house sellers; however, the lender must examine and approve all of the information surrounding the transaction before it can proceed.
Short sales may be time-consuming and unpredictable due to the fact that everything is reliant on the lender.
In a foreclosure situation, on the other hand, the bank takes possession of the home if the buyer is unable to make payments on the loan. The lender is the one who initiates this procedure. The lender will compel the sale of the property in order to recoup as much money as possible from the sale of the property. However, if the homeowners are still residing in the home, they will be evicted by their lender over the course of the foreclosure proceedings. After that, the lender will seek to sell the property, either at an auction or through the use of a real estate broker.
Which Is Better?
Because of these two factors, a short sale is often preferable than a foreclosure for homeowners. First and foremost, a short sale is entirely optional (while a foreclosure is forced). For the second time, most persons are forced to wait a minimum of seven years following a foreclosure before they may apply for another mortgage loan (while a short sale may cause you to wait for at least two years). (1)A short sale is preferred by the majority of lenders over a foreclosure procedure because it allows them to reclaim as much of the original loan as possible without having to go through a time-consuming and expensive court process.
How Does a Short Sale Work?
There is no need to search any farther if you’re wondering what the regular procedures are that typically occur as part of the short sale process. Step 1: The homeowner begins by discussing the possibility of selling their property through a short sale with their lender and a real estate agent. At this time, they can submit a short sale package to their lending institution. The borrower must also show their lender that they are no longer able to make their mortgage payments and that they do not have any assets that would allow them to catch up on payments if they were to default.
- When a buyer expresses interest in the property, they will complete a sales contract for the purchase of the property.
- Step 3: The lender evaluates the contract and may respond in a number of ways depending on the circumstances.
- 4th Step: When the lender’s response is provided to the prospective buyer, the contract will either remain unchanged or the buyer will select whether or not to accept or reject the lender’s conditions.
The lender obtains all of the money from the sale of the property and releases the original homeowner from their mortgage loan—even when the sales did not completely pay off the loan’s principal and interest sum.
How to Buy a Short Sale Property
In the event that you are considering purchasing a short sale home, the following are some suggestions to keep in mind during the process.
1. Do your research.
To prepare for making an offer on a short sale home, collaborate with your real estate agent to do an investigation of the property. Your agent can review public records to see how much money the homeowner still owes on his or her house loan. Your realtor should be able to provide you with sound advise regarding making an offer based on this information as well as comparable houses in the region.
2. Understand the lender is calling the shots.
It’s possible that you’re collaborating with the seller and their agent to prepare a short sale offer, but bear in mind that the lender ultimately has power over the short sale process.
3. Always do ahome inspection.
When purchasing a short sale, you may be tempted to skip the inspection in order to expedite the process, but this would be a major error. A professional house inspector should always be hired to do an evaluation of the property. Purchasing a home without doing a thorough examination may be quite dangerous.
4. Partner with an expert real estate agent.
In order to be successful in the short sale process, whether you are selling or purchasing, you must work with a real estate professional that specializes in short sale homes. You’ll need a real estate agent you can depend on to guide you through the short sale process and answer any concerns you may have along the way, because short sales are quite complicated.
Why Lenders Do Short Sales
Lenders will only engage in a short sale procedure if they feel it will provide them with the best opportunity to recover as much of the mortgage loan balance as possible. This means they will accept a mortgage repayment amount that is less than the sum due. Short sales are thus not considered by lenders in situations such as those described below:
- The loan has been paid in full. If the homeowner is paying on-time payments, the lender has no reason to believe that they will be unable to do so in the future. (It’s a no-brainer, really!) Most of the time, the homeowner must be served with a notice of default before the lender will even consider granting a short sale request
- The homeowner files for bankruptcy protection. Negotiating a short sale is seen as a collection operation, which is not permitted in bankruptcy proceedings.
The sole advantage for the lender is that a short sale is less time-consuming and less expensive for them than going through with a foreclosure. When it becomes evident that a foreclosure would be unavoidable, a lender is more likely to grant a short sale request than it is otherwise.
Why Homeowners Do Short Sales
If a homeowner is considering a short sale, the situation has deteriorated significantly. In their eyes, a short sale means losing their property and not making a profit. In addition, they must deal with the emotional strain of persuading the lender to allow them to proceed with the transaction. In most cases, short sales are not the best solution; the only reason a homeowner would want to adopt this method is to avoid going into default on his or her mortgage payments. While going through the procedure, the homeowner’s primary attention should be on convincing the lender that a short sale is the most advantageous alternative.
- As evidence of their inability to keep their mortgage current and the absence of any assets (cash, savings, automobiles, etc.) that might be utilized to make up for missed payments, they must: Confirm that the value of the local property market has fallen to such a low level that the home will not sell for enough money to pay off the present balance of the mortgage. In order for a short sale to be considered, most lenders will want a written contract between the seller and the buyer. In the short sale agreement, be certain that the lender waives its right to pursue the homeowner for any outstanding amount on the loan
In order for a short sale to be successful, both the lender and the homeowner must be ready to accept a loss on the sale of the property. The homeowner will not earn a profit, and the lender will actually lose money because the house was sold for less than the amount owing on the mortgage.
A short sale is not something that can be completed on your own. It is vitally necessary to work with a real estate agent that has extensive expertise in short sales.
3 Things to Consider Before Buying a Short Sale
There is no clear-cut solution to the question of whether or not you should acquire a short sale property. Determining whether or not a short sale property is a good fit for you is dependent on your individual position as well as the specifics of the property. One thing is clear, however: if you want to purchase a short sale home, you should be prepared for a lengthy and difficult procedure in the majority of instances. Prior to putting an offer on a short sale property, you should be aware of the following three points:
1. The timeline will be slow and unpredictable.
Because the lender must approve the short sale contract before it can be executed, it might take weeks or months before you learn whether or not your offer was accepted. Due to the fact that the lender’s readiness to sell the home at that price is utterly unpredictable, there is no way to predict how long the process will take.
2. You’ll probably have to buy the house as-is.
Because the lender is in the driver’s seat, it’s doubtful that they will agree to pay for any additional expenses, such as closing charges or repairs that are required. It’s possible that you won’t be allowed to request repairs, but you should always get a property inspected to ensure that you know precisely what you’re getting into when you buy a house.
3. You may not be getting a great deal.
It is possible that a short sale property will be offered for less than it is actually worth in order to attract purchasers into the market. However, this does not imply that this is the price at which it will sell. Since part of the short sale procedure, the lender will normally hold off on evaluating the price until after a proposed contract and an appraisal have been completed, as they will want to obtain a price that is as near as feasible to market value. A seller may be willing to accept a lesser offer than the asking price if it results in the best possible closing circumstances or if they need to close on a specific date quickly.
While there may be circumstances in which a short sale home is a fantastic value, this will not always be the case—so proceed with caution.
Find a Short Sale Expert!
In order to make an informed decision about purchasing a short sale house, you should consult with a real estate professional who is familiar with the short sale procedure. Do you want assistance in locating an expert? Our Endorsed Local Provider program can assist you in locating the most well regarded real estate professionals in your local region. Ask them about their experience with short sales when you are interviewing them to see which one is the greatest fit for you. The short sale procedure may be navigated successfully with the assistance of an experienced real estate agent!
Ramsey Solutions is the author of this article.
Millions of individuals have benefited from our financial advice, which has been made available through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and ten podcasts, which have a combined weekly audience of more than 17 million people.
What Is A Short Sale?
However, short sales were widespread in the housing market from 2008 to 2012, but they are now uncommon in today’s thriving market. Nonetheless, these foreclosed properties may once again become a part of the homebuying scene. Even while a short sale might result in an excellent price on real estate, the process often requires a great deal of fortitude and patience, as well as a lot of luck.
What is a short sale?
A short sale is when a lender agrees to accept a mortgage payback amount that is less than the amount outstanding in order to enable the sale of a property by a financially troubled owner. Short sales are common in the real estate industry. The remaining balance of the loan is forgiven by the lending institution. In contrast to purchasing a property at a foreclosure auction or one that is truly held by the bank, known as a REO or real estate owned property, purchasing a home through a short sale is a more cost-effective option.
In this case, the homeowner has negative equity and may be forced to sell the property.
Is a short sale the same as a foreclosure?
A short sale and a foreclosure are not the same thing. In a foreclosure, the bank takes possession of the property and then attempts to sell it for enough money to recoup their losses. In a short sale, a bank acknowledges that it will not be able to recoup its costs, and it is generally believed to be a preferable alternative to dealing with the red tape associated with foreclosure and then dealing with a separate transaction in the future.
Who benefits from a short sale?
Short sales are a mixed bag of emotions for everyone involved: the buyer, the seller, and the lender. If you’re a seller, you should expect a short sale to negatively impact your credit — albeit not as severely as a foreclosure. Apart from that, you would walk away from your property with nothing from the transaction, making it harder for you to locate an alternative place to reside. A short sale, on the other hand, can prevent foreclosure and the resulting bad impact on your credit. As long as the homeowner can persuade the lender to record the loan to credit bureaus as “paid in full,” a short sale is preferable to a foreclosure in terms of financial damage.
It is possible that a lender will ask a buyer to pay additional closing fees that would ordinarily be assigned to the seller.
In a short sale, the proceeds from the transaction are less than the amount required by the seller to pay off the mortgage obligation and cover the costs of the transaction.
As a result, short sales are complicated transactions that proceed slowly and frequently fail to close. Everyone benefits in some way from a short sale, while everyone also loses something in the process. A short sale is ultimately about avoiding a worse situation from occurring.
Should I sell my home through a short sale?
Whether or whether you should proceed with a short sale is determined by your unique scenario and what is most likely to work best for you in the long run. If you are unable to make your mortgage payments and house prices in your neighborhood have declined, you may not have much of an option except to refinance. A short sale may be able to assist you in preserving part of your credit by preventing a foreclosure from being recorded on your credit report. Consider all of your options carefully to determine which is most likely to be the most effective in your circumstance, and then proceed with the one you believe is the most appropriate for you.
How long does a short sale take?
A short sale can take as little as a few weeks or as much as several months, depending on the circumstances. Short sales are more time-consuming than traditional sales since they are more intricate processes. In addition, the original lender must analyze the short sale offer in order to determine whether or not to accept it as is. If the lender feels that going through the foreclosure process would result in them making more money, they may decide not to accept the short sale offering. Working with a real estate agent that has previous expertise with short sale transactions can help you decrease the amount of time it takes.
Make sure you talk with an agent who can exhibit particular training and a successful track record in handling short sales before you proceed with the transaction.
How often do short sales fall through?
Short sales fail to close on a somewhat regular basis because of the complexities inherent in the transaction. However, you may lessen the likelihood of this occurring by ensuring that the following items are readily available:
1. A hardship letter
The seller must provide an explanation as to why they are unable to continue paying payments. The more tragic the narrative, the better. A seller who is simply weary of suffering will most likely not be authorized, but a seller who has cancer, no work, and an empty bank account may be approved instead.
2. Proof of income and assets
A lender is unlikely to forgive debt if the seller has money in the bank, even retirement assets. Income tax returns and bank statements dating back at least two years must be included in the verification of income and assets. Sellers may be reluctant to provide these papers because they disagree with the information on the initial loan application, which may not have been totally correct. If such is the case, it is doubtful that the transaction will be completed.
3. Comparative market analysis (CMA)
It is possible that a comparative market analysis, or CMA, will demonstrate that a property’s value has decreased and that the property will not sell for the amount owing anytime soon, which will support the seller’s claim that the property is worth no more than the short sale price. Included in the research should be a list of similar homes currently on the market, as well as a list of properties that have sold within the last six months or that have been on the market during that time frame and are ready to close.
In some ways, the CMA resembles what is known as a Broker Price Opinion, which is less formal but frequently more helpful.
4. A list of liens
There may be more than one lien on the property, so figure out how many are on the books. The good news is that the Internal Revenue Service (IRS) has been ready to dismiss a federal tax lien since late 2008. Rather of forgiving unpaid taxes owed by property owners, the Internal Revenue Service is no longer insisting that the lien be paid off before the property may be sold. A single mortgage lien is a straightforward issue to resolve.
Steps to buying a house through the short sale process
Before you purchase a short sale, it is critical that you grasp some of the fundamental principles that govern the transaction. You won’t be able to just acquire a house for a reasonable price in the future. Here are some considerations to bear in mind:
- The lender must be on board. First and foremost, keep in mind that the lender must approve the short sale. In the case of a traditional house sale, the earnings would be used to pay down the initial loan. In a short sale, the home is sold for less than the amount owed by the seller, resulting in the lender not receiving the full amount of their loan. A sale must be approved by the original lender as a consequence of this, and the seller must demonstrate that they have no other choice. Following that, the vendor must demonstrate some type of difficulty. if they can demonstrate that they will not be able to keep up with their mortgage payments and will eventually fail, the lender is more likely to agree, particularly if the lender does not want to go through the foreclosure process and then sell the property on their own
- The price of a residence must be consistent with its market worth. In many circumstances, short sales are completed because the market is deteriorating and the home’s value has fallen as a result of the decline. Short sales must be disclosed, and the price the buyer is paying must be at or above market value in most cases. In addition, each time a house is advertised for less than what is owing on the mortgage, that fact must be made clear up front. The seller’s asking price is less than the mortgage debt, so potential purchasers should be informed that they will be responsible for negotiating with a lender in addition to dealing with the seller.
Several processes are involved in a normal short sale, which are often performed in the following order, according to Bobbi Dempsey, co-author of “The Complete Idiot’s Guide to Buying Foreclosures.”
Step 1: Identify potential short sales
Locate pre-foreclosures in your area by checking online listings, searching courthouse listings, legal ads or using an experienced buyer’s agent. First, try to determine how much is owed on the house in relation to its approximate value. If it seems high, it’s a good candidate because it indicates the seller might have trouble selling it for enough to satisfy the loan. Pass on those in which the owner has a lot of equity in the home — the lender likely will prefer to foreclose and resell closer to the market price.
Step 2: View the property
Assess the property’s current state and make an educated guess as to how much it will cost to restore or renovate the property. It’s a good thing that many “regular” customers won’t consider it if it requires work since it will benefit you.
Step 3: Do your research
What is the market value of the property? What is the possibility for profit? If you’re an investor or even a homeowner who only intends to reside in the property for a short period of time, you’ll want to make a profit on the transaction.
Step 4: Find all liens and mortgages
Identify any liens on the property and determine which lender is the principal lien holder by speaking with the seller or the agent. Make sure this information is accurate by conducting a title search on the property before finalizing the transaction to ensure there are no hidden liens on it.
Step 5: Figure out the financing
This is quite important. You must have a plan in place for how you will pay for the property. The present lender may be prepared to provide you a loan if you have a solid credit score and are a good risk. As a result of the short sale papers already including a great deal of your information, they may be able to speed the loan application process for you. The capacity to move swiftly is critical when dealing with a short sale, which should be understood. Once an agreement has been reached, it is usual for the lender to ask that the transaction be completed in as little as 20 days.
Step 6: Contact the lender
As opposed to the collection or customer service departments, which are exclusively concerned with recouping past-due loan payments, you or your agent should contact the lender’s loss mitigation department — or even the resource recovery department — instead. Finding the right decision-maker might be one of the most difficult tasks at the start of a project.
In order to discuss the mortgage position with you, you will first need to have the homeowner complete and sign an authorization letter (notarization is normally necessary), which provides the lender permission to speak with you about his or her mortgage status.
Step 7: Complete the lender’s short sale application, if they have one
Many lenders provide a special application that may be used to submit a short sale request. Discover what papers they need to provide in order to evaluate a short sale if they do not have a short sale application on file.
Step 8: Assemble the proposal
The proposal is often comprised of a bundle of papers that includes the application and authorisation letter, as well as the following:
- Purchase and selling contract
- Hardship letter
- And other documents. Value of the property as stated in a statement an explanation of the costs and liabilities in detail a statement of settlement
Step 9: Negotiate the terms
Purchase and selling agreement; letter of hardship Value of the property as stated in a written statement an in-depth breakdown of the costs and liabilities Agreement on the terms of the settlement
Step 10: Seal the deal
Make sure everything is put in writing and formally documented as soon as possible once you’ve reached an agreement that all three parties — you, the seller, and the lender — can live with. Make certain that the seller is aware of all of the conditions of the transaction. Then there’s the closing, and the property is officially yours.
Common mistakes short sale buyers make
Come along with your home inspector when he comes to check your home. You might be astonished at how much information you can get.
- When an inspector notices an issue, you may either ask for repair estimates right once or do your own investigation afterwards. Consider hiring expert inspectors to examine for costly problems such as termites, mold, and structural damage, especially if it’s a widespread problem in your region, to avoid making a costly mistake. Hire an inspector who has a good reputation. Consult with your friends for recommendations, or pay close attention to internet user evaluations. There are outstanding, middling, and awful inspectors in the inspection sector, just as there are in every other industry. You are given a certain window of time to view the property, which is referred to as an inspection period. When purchasing a standard real estate property, shortening the inspection time may provide you an advantage while putting a bid. However, when purchasing a foreclosed or short sale property, don’t scrimp on or skip the inspection period. Make use of this opportunity to make a decision.
Ignoring legal and insurance information
A typical disclosure statement might identify whether or not a property is located in a flood plain or whether or not it has undergone any unpermitted remodeling. Bank-owned properties, on the other hand, are frequently sold “as is,” with no disclosure, requiring bidders to conduct further due diligence on the property.
Leaving too little time for closing
Short sales and foreclosures are also options. It is important for purchasers to understand that the deal may not necessarily close as soon as it would in a traditional property purchase. If the short seller wants to short sell, his or her lender must approve the foreclosure conditions or short sale price, which will be less than what the seller owes on the property. Banks, on the other hand, may be sluggish to respond. Finding a house loan from the bank that holds the mortgage on the short sale you’re interested in purchasing is not always possible or even desired.
Falling hard for a bad home
Don’t make the mistake of assuming you’re getting a good deal on a home, advises Connecticut real estate investor Jim Randel, author of “The Skinny on the Housing Crisis.” “Consider yourself as an investment,” he advises his audience. Examine the house’s condition, the inspection, the price, and the worth objectively. Randel recommends that you ask yourself the following common-sense questions about your life:
- Is it possible for you to rent out this property for as much as, or even less than, the amount of your mortgage monthly if you were to purchase this property? To estimate your mortgage payment, use Bankrate’s mortgage payment estimator. What would you do if the value of your property declines by 20%
- Will you still be content with your purchase
- What amount of money would you need to spend on the property in order to make it habitable
Be realistic about the issue and be willing to walk away if the statistics don’t add up in your favor when you run the calculations on the circumstance. Miranda Marquit contributed additional reporting. Artazum of Shutterstock provided the featured image.
- Find out how to avoid foreclosure by following these steps: What you need to know about getting a mortgage after bankruptcy
- Finding a mortgage with weak or negative credit might be difficult.
7 Potential Risks of Purchasing a Short Sale
Purchasing a short sale However, while it might be a fantastic chance to obtain a house at a discounted price, it can also have its drawbacks. Due to the fact that purchasing a short sale property is a more difficult procedure than purchasing a traditional home, there are certain special dangers associated with investing in this type of investment property.
Learn about the seven hazards associated with a short sale so that you can prepare appropriately and determine whether or not it is the correct investment for you.
1. Long Process
Short sales may not be the greatest option for people who want or need to acquire a home as soon as possible. Obtaining approval for a short sale can be a time-consuming procedure. They can be finished in as little as a month or as long as a year, depending on the complexity of the situation. Many factors can impact this timeline, including the lender’s prior expertise with short sales, whether or not the seller has already been authorized for a short sale, and the number of lenders engaged in the short sale transaction.
2. Subject to the Mortgage Lender’s Approval
In a regular property sale, the individual who owns the property is the only one who has to give his or her approval to the transaction. In the event of a short sale, however, this is not the case. In addition to the present owner, there are other parties who must accept the offer. Because the owner is attempting to persuade their mortgage lender to accept a lower price for the property than they are due, the lender must authorize the transaction. Lenders are not always happy to face a loss on a loan they have made to a customer.
3. Lender Could Counter, Reject or Not Respond
The lender may accept your offer even if the seller has previously been accepted for a short sale by their lender. However, this is not a given. They may think your offer is too low and reject it. If this is the case, the lender may choose to challenge your offer, reject your offer outright, or just not reply to your offer at all. This is a huge and serious danger, especially considering the fact that you might have been waiting months to even get to this position. Even if the lender offers a counter-offer, there is no assurance that the price is one that you would be willing to pay based on your perception of the property’s value.
Furthermore, if the property is subject to several liens, you will need to get the consent of each and every lien holder before proceeding.
4. Opportunity Cost
Another danger associated with short sales is that the long short sale procedure may cause you to lose out on other prospective acquisitions in the meanwhile. If you spend all of your time and energy negotiating a short sale for several months, you may lose out on a superior investment opportunity that is available to you.
5. Property ‘As Is’
A short sale is typically attempted by sellers who are facing some form of financial trouble at the time of the negotiation. Therefore, they may be unable to maintain their property because they lack the financial means to do so. This inability to keep up with maintenance may be evident, or it may be hidden beneath the surface in structural, electrical, or plumbing concerns that need to be addressed immediately. When you purchase a short sale property, you are often purchasing the property ‘as-is.’ Because the bank is already losing money on the property, it is unlikely that they will make any concessions for these maintenance problems.
In order to find any serious flaws that the property may have, it is critical to have a home inspection performed before closing on the property.
6. Is the Seller Approved?
Just because a property is advertised as a short sale does not imply that the seller has been accepted for a loan modification. They may believe they qualify for a short sale, but this designation is meaningless until and until the bank or mortgage lender actually approves the transaction in question. If you are considering becoming engaged in a short sale, you should always double-check that the seller has been allowed for one by their lender. Otherwise, you might be wasting your time or you could find embroiled in a lengthy legal procedure that could last months or even years.
7. Lenders Prefer All Cash or Large Down Payments
Another risk associated with a short sale is that the property will be sold to an all-cash buyer or to a buyer who is able to make a substantial down payment. The majority of banks and other lenders prefer to work with these sorts of purchasers when negotiating a short sale. They consider them to be less hazardous than a buyer who is required to take out a huge mortgage in order to acquire a piece of property.
The Drawbacks of Short Sales for Buyers and Why You Should Be Wary
A short sale occurs when a seller does not obtain enough money from a buyer to completely pay off their mortgages and other debts. It’s possible that the seller overpaid or borrowed money to purchase the home. Because the housing market has slowed, the fair market value of a home may be less than the amount owed on the mortgage. Although this appears to be a terrific deal for the buyer, these houses are typically sold “as is” and can take far longer to close than usual. In order for a short sale to take place, the lender must agree to accept less than the amount owing on the existing mortgage.
Short Sales Don’t Mean a Discount
Banks are willing to lend money in a market that is on the rise. It is possible that they will grant a loan that is too much for the purchasers to handle. The owner is left with minimal equity and a mortgage that cannot be paid off through a sale when the market ultimately declines to its lowest point. Buyers end up owing more money on their property than it is worth at the time of purchase. If you acquire a short sale property for $400,000 that sold for $500,000 a few years earlier, you are not suddenly gaining $100,000 in equity.
It is against the law for certain appraisers to be compelled by banks to value a house at the amount of money a buyer wishes to borrow from a lender.
Agents Might Be Pushing the Sale
When a seller does not qualify for a short sale, inexperienced or unscrupulous real estate brokers may pressure the seller into doing so. Before a short sale may be accepted, the seller must provide proof of their financial difficulty to their lending institution. Some real estate brokers may market houses as short sales without ever speaking with the lenders or obtaining pre-approval from the homeowners. When shopping for a property, this leads you and your realtor to lose valuable time, as well as perhaps money.
Homes Sell As Is, at Market Value
Lenders are not naive about the worth of a house, nor are they uninformed about it. Before agreeing to a short sale, they’ll need a comparative market analysis (CMA) or a broker price opinion (BPO) from an independent third party. If a lender feels that placing the property into foreclosure would result in a greater return on its investment, it may be willing to hold out for a higher price. The majority of the time, lenders will only allow short sales when a house is worth the short sale price, which is the market value.
Lenders anticipate that you will acquire the house in its current condition. Most of the time, they will refuse to make any improvements or pay for any problems that are discovered during a house inspection, such as:
- Clearing up a pest report
- Roof repairs
- Other neglected maintenance
- Home protection for the buyer
- And other services.
It Can Take Longer to Close
Depending on the lender, it might take several weeks to several months for a short sale purchase offer to be accepted and processed. It is dependent on when the seller filed the notice of default, how many foreclosures are currently on the lender’s backlog, and how much paperwork the seller has previously submitted. It is possible for sellers to have more than one mortgage on their property. In such instances, it may take much longer to meet the requirements of both lenders. At the last minute, some lenders reserve the right to amend the conditions of a short sale.
Lenders typically have attorneys on staff or who are hired on a contract basis.
Lender Commissions and Higher Closing Costs
Brokerage commissions are often paid by lenders who have sold loans to Fannie Mae or Freddie Mac, however some lenders could insist on receiving a discount. Real estate brokers often find themselves performing two to three times the amount of work on a short sale, which they do not particularly enjoy doing. It’s possible that if you’ve committed to pay your agent a particular percentage of the sale price under a buyer’s broker agreement and your agent refuses to waive that percentage, you’ll be accountable for the difference between what the lender will pay and the amount stated in your contract.
If you require any further services or supplies at the time of closing, you will be responsible for paying for them.
You’ll very certainly have to pay for them out of your own cash.
There’s No Control, and Sellers Aren’t Motivated
Don’t expect escrow to be completed on a set date. The closing procedure for a short-sale transaction can be lengthy. It is the seller’s lender that makes the final decision, not you or your lender. If you’re attempting to close escrow at the same time as you sell your present house, it’s possible that things will not go as planned. Make sure you have a plan B in case something goes wrong. Once a seller learns about the unfavorable impact a short sale would have on their credit, there is little reason for them to assist with the transaction.
The Bottom Line
Make no assumptions about if or when escrow will close. The closing procedure for a short-sale transaction can be time-consuming and difficult. Instead of you or your lender, it’s the seller’s lender that makes the final call. In the event that you are trying to complete escrow at the same time that you are selling your present home, things may not go as planned for you. Always have a fallback strategy in place. Once a seller learns about the bad impact a short sale would have on their credit, there is little motivation for them to cooperate.
Some sellers, despite the fact that they may be able to purchase another home within two years of selling their current property, have no intention of ever purchasing another home.
Frequently Asked Questions (FAQs)
Although approval of a short sale can take up to six months, the majority of short sales are authorized within 30 to 120 days of submission. There are a variety of elements that influence how long this procedure takes. If a federal agency such as the Department of Housing and Urban Development is involved, the procedure may take longer. If your lender has not authorized the sale within 120 days, you may want to contact them to see if there is something that is preventing the transaction from proceeding.
How long does a short sale stay on your credit report?
If you’re the one who’s selling in a short sale deal, it will almost certainly appear on your credit report, but not in the way you’d expect it to appear. Short sale will not appear on your credit report, but if you were delinquent on payments or did not fully pay off your mortgage, the account associated with the short sale will have negative marks on it that could remain on your credit report for up to seven years after the transaction was completed.
The Short Sale Explained
Short sales were more prevalent during the Great Recession of 2008, when many homeowners found themselves underwater on their mortgages, meaning they owed more on their loans than their properties were worth. In spite of the fact that the housing market has steadily recovered since then, short sales continue to be a viable option for homeowners who are unable to keep up with their mortgage obligations. Throughout this essay, we’ll cover the basics of what a short sale is and how it works, as well as the advantages and disadvantages of short sales for both sellers and buyers.
What Is A Short Sale In Real Estate?
A short sale, also known as a preforeclosure sale, allows a struggling homeowner to make a proposal to their lender in order to sell their house for less than the amount of the outstanding mortgage debt. This process is initiated by the seller in order to avert foreclosure on the property. This alternative assists the borrower in getting out from under the burden of mortgage debt while causing less damage to their credit than a traditional foreclosure (more on that later). It also assists the lending institution in recouping a portion, if not the entire, of the difference between the original mortgage balance and the remaining mortgage balance.
How A Short Sale Works
The seller will need to submit a hardship letter to their lender explaining why the mortgage cannot be completely repaid, as well as supporting evidence such as pay stubs and tax returns, in order to short sale their house. Most of the time, a lender will only consent to a short sale if the homeowner has only recently experienced financial difficulties. A sudden health crisis or a deterioration in financial status is more likely to persuade a lender than a long-term problem that has gone unnoticed for a lengthy period of time.
As the name implies, a short sale property is one that is sold for less than the remaining balance of the mortgage debt, therefore being “short.” The lender will either waive the difference in any remaining debt or get a deficiency judgment against the borrower once the residence has been sold and proceeds have been received.
Having said that, in some places, the law stipulates that if a short sale occurs, any difference between the purchase price and the sale price must be forgiven.
The time period for a short sale is different from the time frame for a conventional real estate transaction. It may take several weeks for the lender to make a decision on an offer. An permission letter will be sent by the lender at that point, which will outline the details of the transaction.
Short Sale Benefits And Drawbacks For Sellers
The seller will need to submit a hardship letter to their lender explaining why the mortgage cannot be completely repaid, as well as supporting evidence such as pay stubs and tax returns, in order to short sale their house. When a homeowner has only recently experienced financial difficulties, the lender is more likely to approve a short sale. When faced with a sudden health crisis or a deterioration in financial condition, a lender is more inclined to believe you than if you have a long-term problem that has gone unnoticed.
Typically, a short sale house is sold for less than the remaining balance of a mortgage debt — hence the term “short sale.” The lender will either waive the difference in any remaining debt or get a deficiency judgment against the borrower once the residence has been sold.
Even yet, in some areas, the law mandates that any difference in value between the purchase price and the sale price be forgiven in the event of a short sale.
It may take many weeks for the lender to make a decision on a loan.
- In most cases, those who go through the short sale procedure may buy a property immediately without having to wait, however acquiring a mortgage may be more difficult in other cases. For as long as your mortgage payments are current in the year leading up to the short sale and the year before you apply, the Federal Housing Administration (FHA) will enable you to apply for a new mortgage on the spot. When a borrower goes through a foreclosure, the event is recorded on their credit report for seven years. Having a good night’s sleep: With a short sale, the seller avoids the emotional upheaval that comes with going through the foreclosure process. Apart from that, most homeowners are granted permission to remain in their property while it is being sold. Fee savings: Normally, the weight of closing fees and real estate agent commissions falls on the shoulders of the seller. Those costs and charges, on the other hand, will be covered by the lender in a short sale.
- Seller permission:Sellers must obtain clearance from their lender before proceeding with a short sale, which can cause the transaction to be delayed or even halted entirely. Acceptance of a short sale can be difficult to acquire. Even when the homeowner has a genuine explanation for their inability to make mortgage payments, the lender may still decide not to accept the short sale and instead pursue a foreclosure
- Leaving with absolutely nothing: In contrast to a standard sale, in which the proceeds are distributed to the seller, the proceeds of a short sale are distributed to the lender in order to collect the debt. Moreover, it’s possible that a short sale will fail to completely pay off the remaining mortgage, in which case the lender may compel the borrower to make up the difference. Damage to one’s credit score: A short sale can lower your credit score by as much as 160 points, which is not as severe as the damage caused by a foreclosure on your credit history.
Short Sale Benefits And Drawbacks For Buyers
There are several advantages and disadvantages for house purchasers who purchase short sales, including the following:
- Sellers who are motivated: Because the seller wants to avoid foreclosure and the lender wants to recuperate losses, both parties will work aggressively to approve a contract, which can put the buyer in a stronger position to negotiate the price. Because the seller and lender are willing to incur a loss on the property, short sale homes are often priced cheaper as well. Short sales are more difficult to acquire because of the intricacy of the transaction and the uncertainties around the time period. As a result, there will be less competition for individuals who are ready to get into a short sale deal.
- Longer time frame: The documentation procedure for a short sale is more involved and takes significantly longer (up to 120 days) than the paperwork process for a typical house sale (around 45 days). Once an offer has been submitted, it must be authorized by the bank, which might take several weeks or even months depending on the circumstances. Even if a short seller accepts an offer, the lender may still choose to reject it if they believe they can earn more money by foreclosing on the property in question. At the end of the day, the lender is in charge of the transaction, and it might take as long as a year for a short sale to be processed and finalized. Involvement of the seller and the lender: If the lender and the seller want to recuperate as much money as possible, they may become personally involved in the transaction by disputing offers and requesting concessions, such as requiring the buyer to cover all closing costs. The possibility of home disrepair: A short sale home, like a foreclosed home, may be in a condition of decay or abandonment, similar to a foreclosed home. If you want to avoid unpleasant surprises, you should engage with an experienced buyer’s agent and a house inspection specialist. If a short sale house is in bad condition, it might cause complications for the buyer if the buyer is applying for an FHA loan, which has strict livability requirements. Consequently, if you discover anything that has to be rectified prior to applying for the loan, your application may be denied. Having said that, some short sale properties are sold “as is,” which means that the lender and the seller will not be responsible for any repairs. Large down payment: Because lenders have ultimate permission over the sale of a home, many buyers strive to tailor their offers to their needs when putting up an offer. One method to accomplish this is to make a significant down payment. This choice demonstrates to the lender that you are committed to purchasing the home and are not likely to back out of the transaction. Unfortunately, this also implies that if you want to go through with the short sale procedure, you will most likely need to put up a large amount of money ahead of time.
Foreclosures Vs. Short Sale Homes
Many individuals still connect short sales with foreclosures, which is a common misunderstanding. Although the conditions behind short sales and foreclosures are frequently the same, the procedure and repercussions for the homeowner, as well as the lender, are distinct from one another. In the event that a homeowner is unable to make mortgage payments for an extended length of time, a legal procedure known as foreclosure is initiated. When a lender decides to initiate the foreclosure process on a property, the homeowner has no say in the issue and is often evicted, either with or without judicial intervention, depending on the jurisdiction in which the property is located.
The lender has the ability to repossess the mortgaged house since they are the principal lien holder, and they have the authority to do so if the payments are no longer being made.
It is possible that the borrower will be able to complete a short sale even though the lender has already begun the foreclosure process, depending on the borrower’s financial circumstances.
The Short Sale Process: Step By Step
If you’re a homeowner who has fallen behind on your mortgage payments and are considering a short sale, you should examine how probable it is that your lending institution will agree to a short sale in your situation. It’s important to remember that the lender is under no obligation to do so. Here are a few things to think about before submitting a short sale request.
1.Assess Your Financial Situation
When you approach your lender about a short sale, the nature of your present financial difficulties will almost certainly make a difference. Consider the scenario in which your incapacity to make payments is the consequence of anything that happened recently, such as a loss of income or unanticipated medical expenditures, as an example. As a result, it’s reasonable to expect that your lender will be understanding of your predicament. The lending institution will be far less likely to consent to a short sale if, on the other hand, the source of your financial difficulties is something that has been for as long as your mortgage and was not revealed at the time of your loan application.
Make sure you’re just spending money on the things that are really necessary in the meanwhile.
2.Request Short Sale Approval From The Lender
When it comes to short sales, it is generally recommended that you wait until your mortgage payments have fallen behind or when you are unable to make any more payments. If you are still able to make part of your mortgage payments, the lender will be less likely to view a short sale as a viable option. As an alternative, they may simply determine that a foreclosure is their best option for recouping the money they have invested. In order to seek a short sale, be certain that you communicate with the appropriate individuals.
Instead, ask to talk with a representative from the lender’s loss mitigation department.
3.Prepare For The Short Sale
Following clearance from your lender to stage a short sale, it’s time to put together your short sale plan and begin looking for possible purchasers for your property. In the event that you have not previously done so, you should speak with a real estate agent, a tax specialist, and an attorney, as short sales are more complicated than the ordinary property sale. If you make a mistake throughout the procedure, it might end up costing you far more money than necessary.
4.Price The Short Sale
Setting the price for your short sale will be different from setting the price for a traditional property sale.
Despite the fact that you’ll want to sell your home for as near to market value as you possibly can (and your lender will allow), keep in mind why you decided to arrange a short sale in the first place.
5.Build Your Proposal And Find A Buyer
You’ll need to locate a buyer for your short sale, just like you would for any other type of property sale. You’ll need your short sale proposal in order to accomplish this. Aside from submitting the regular paperwork, you’ll also need to attach documentation demonstrating the financial difficulties that prompted the short sale request in the first place. Depending on your circumstances, this proof might take the form of medical bills, a notification of employment termination or other formal documentation that demonstrates your present financial or legal condition.
Try to be persuasive, but avoid exaggerating or dramatizing your circumstances.
You can include the signed purchase agreement in your proposal packet, as well as the prospective buyer’s contact information, if you have received a purchase offer.
6.Submit Your Short Sale Proposal
Once your proposal is complete and you have identified a potential buyer, it is essential to send both your proposal and the buyer’s offer to your lender. Make sure you are aware that your lender will have access to your financial information and may use it to reject your proposal if you do not disclose it when submitting your proposal. It is possible that you will be required to utilize your cash assets to make mortgage payments or to offset part of the deficits between the mortgage and the final sale price if you have cash assets that have been recorded.
Even if your short sale is authorized, you will still have to wait for the lender to accept the buyer’s offer before closing the transaction.
At this point, there is nothing you can do but wait.
The Bottom Line:Understanding Your Options
The occurrence of any number of conditions might result in financial difficulty. If you’re a homeowner who’s finding it difficult to keep up with your mortgage payments, speak with your lender to discuss your alternatives. Negotiating a loan modification or amended payment plan may be possible in your situation. Before agreeing to a short sale, make certain that it is the best option for you. If you’re in the market to purchase a house and acquiring a short sale seems like something you’d be interested in, you can get started online or by speaking with a Home Loan Expert right now.