When a property owners sells their home for less than the outstanding loan balance, this is considered a short sale. In most cases, this happens when the homeowner can no longer keep paying their house payments, but the sale of the property would be enough to cover the loan balance. Short sales reached a peak in the years of 2007-2010 and while they have slowed significantly in the last several years, there are still a number of troubled homeowners who may be looking at the option of a short sale in the near future.
The following are some of the most interesting and important factors about short sales to keep in mind:
- When hiring a real estate agent, make sure that they have experience in and are very familiar with short sales – as the process is rather different that a traditional real estate sale
- A short sale and a foreclosure are not the same thing, the most notable difference being the homeowner’s involvement in a short sale
- Many homeowners neglect to tidy up their home in a short sale, but this is a big mistake as uncluttered homes sell best
- The term “short sale” is misleading, as short sales are typically a lengthy process and a long closing time
- There are a variety of eligibility requirements that must be met in order to avoid a foreclosure such as you must owe more than the house is worth, you must prove some type of financial hardship, you must show why you are unable to make monthly payments, and you cannot be eligible for a loan modification
- Buyers are likely to continue to negotiate for a lower price following the inspection
- Patience is critical in a short sale and sellers should expect 90 days to gain approval
- Monitor overall expectations, as less than 25% of short sales actually end up closing
- While it may seem implausible, the lender is typically getting the better end of the deal in a short sale
Going through a short sale is a long and stressful process. At the Law Office of Brenda Murzyn, P.C., we are here to help. Please contact our office and our trained staff can assist you in negotiations with all parties involved.