Short
sales are exactly the opposite of what their name says. They do not take a
“short” amount of time to complete… they take quite a long time. In fact, no
two short sales are alike because banks handle them each differently and there
are no set of rules for banks to follow.
A short
sale begins when the owner needs to sell the property and the property is
valued at less than what is owed to the bank. And the owner does not have the
money to pay the difference to the bank of the property’s value (purchase
price) from the actual amount owed to the bank. Sometimes the difference can be
as little as 10K or more than 100K. In a short sale, the owner is asking the
bank to sell the home “short”…. Short of the cash needed to pay off the loan.
And asking the bank to forgive the remaining balance of the loan. The bank can
either accept or reject this request.
It
starts with a hardship of some sort. The loss of a job, a family illness, even
a job transfer. The owner needs to sell the home but the home is worth less
than what is owed. And the owner would have to bring money to the closing table
to make it a “normal” sale. Money the owner does not have. So the owner starts
out by listing the home with an agent and the agent knows in advance that it
will be a short sale. The home begins at the market price. If it doesn’t sell,
the price is lowered. It continues to be lowered because the owner needs to
sell because he can’t afford the mortgage or he is leaving the area. And
because the owner doesn't make one penny from the sale of the home, he doesn't
care what offer he accepts. He just wants out. So the price of the home is
lowered until an offer is received. Now here’s the tough part for some buyers
to understand. Although the bank has to approve the sale and approve the price…
the bank had absolutely no input in the setting of the price. The bank doesn’t
even know the house is on sale until the owner presents an offer. Most of the
time, the offer is very much below what is owed on the property. And sometimes
it is too low for the bank to even consider. Yes.. even though the buyer offers
the list price of the home, it is often too low for the bank to consider.
Because
everyone’s home is worth less today than 3-4-5-6-7 years ago, the bank is very
busy with these types of requests. Sometimes the bank can take 4 months, 5
months, 6 months, and even 9 months to answer the buyer. In the end, the anser
is sometimes a yes and sometimes it’s a no. There’s no way to rush the bank to
answer. The bank is not a person. It's just a bunch of employees following
guidelines and trying to keep their jobs.
So, as
a buyer, you must decide if making an offer on a short sale is right for you.
Once the owner accepts your offer, the paperwork is sent to the bank and months
will pass without a response. If you have this extra time to wait, that’s fine.
But if you want an immediate answer, a short sale is not for you. This is
something only you can decide. There are some great prices on short sales out
there. But what’s on the listing sheet is not necessarily the price at which
you will be allowed to purchase the home. The bank could say no… or make a
counteroffer.
If you
have more questions about short sales, please don’t hesitate to ask. Over 60%
of the homes on the market are short sales!!!
If you or anyone you know might be considering a short sale, you should discuss it with a real estate professional before making a decision. I've helped many people who thought they would have to sell their home get refinancing at a lower rate instead. Right now there are programs out there to allow refinancing even if the current value of the home is less than the current mortgage.
Visit my website or call me for more information at 847-757-6267. I've been a realtor for 11 years and if I can help you save your home, I will. Visit my website to search for short sales, regular sales and foreclosures .... www.helenmazur.com
