What Every Buyer Needs to Know About a Short Sale

SHORT SALES

What Every Buyer Needs to Know About Short Sales

What is a short sale?

• A short sale means a lender

is willing to accept less than the total amount

due on the mortgage.

FACT

• A lender will approve a short sale to avoid the high costs of a foreclosure.

FACT

• Some lenders will allow a buyer to purchase a home for less than the mortgage balance while in the pre-foreclosure stage.

FACT

• THERE ARE 3 STAGES OF FORECLOSURE:

– PRE-FORECLOSURE– FORECLOSURE– POST-FORECLOSURE

Qualifications for a Short Sale

– The mortgage is in the process of default

– The seller has no assets

– The seller is experiencing economic problems.

– The property market value has declined.

Types of Hardship

– Unemployment– Divorce– Medical Emergency– Sudden Illness– Bankruptcy– Death

Steps to Taken for Short Sale

• Seller signs a listing agreement with a real estate agent to sell the property as a short sale which is subject to the lender’s approval.

Steps to Taken Short Sale

• Listing agent finds a buyer who makes an offer for less than the amount of the mortgage.

• Seller accepts the buyer’s purchase offer.

• The lender accepts the buyer’s offer.

• Once all the contingencies are met and due diligence is performed.

• The buyer delivers the funds

• The lender releases the lien

• The seller delivers the deed.

What should a buyer accomplish?

• Obtain a real estate attorney

• Make the offer contingent upon a property inspection and the lender’s acceptance of the offer.

What should a buyer accomplish?

• The buyer should allow the lender a specific amount of time to accept the offer.

• If the lender does not accept the offer within that amount of time the buyer should be able to withdraw the offer.

Why a short sale may not be beneficial

– The seller paid too much originally for the property.

– Home sells in “as-is” condition.

– Transaction takes to long to close.

Why a short sale may not be beneficial

– Lender can modify the terms of the sale at

anytime

– Higher than normal closing cost

Things to Remember

• It may take between 30 to 90 days to close.

Things to Remember

• The seller can accept the

offer but the lender must

approve the short sale.

QUESTIONS

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