Not long ago, few people knew what a short sale was. Now, thanks to the distressed housing market, short sales are happening in record levels. If you’re buying or selling a short sale, there are a lot of hoops to jump through. It’s wise to know what you’re getting into before you take the first step.
In a short sale, the lender agrees to accept a mortgage payoff amount that is less than the balance owed. Typically, the lender forgives the remaining balance.
A lender will not consider a short sale if:
The only benefit to the lender is that a short sale is faster and less expensive than a foreclosure. Once it is clear that foreclosure is unavoidable, a lender is more likely to approve a short sale request.
If a homeowner is considering a short sale, times are tough. They’re about to lose their home without a profit. And, they must endure the emotional stress of convincing the lender to allow them to do it.
Throughout the process, the homeowner’s focus is convincing the lender that a short sale is the best option.
A short sale is not a do-it-yourself deal. A real estate professional who’s experienced in short sales is essential.
The first thing a buyer should know about short sales—they take forever. If your timeline is any shorter than three months, don’t even look at short sales.
Second, all-cash buyers are more likely to be approved. If you’re getting a mortgage on the home, you’ll need to be pre-approved and put up a significant amount of earnest money.
More issues buyers should be aware of:
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