December 31st, 2010 | 
Author: When the sale price of a home is lower than the amount that is due on a mortgage, this is known as a short sale.
This usually happens when the homeowner has not been able to keep up with his mortgage payments.
It can be a decision on the part of the lender that begins the process of putting a property on the market on a short sale basis. One example of this would be when, for instance, a homeowner has a mortgage of $150,000 and can no longer make his payments. He and the institution that holds his loan might agree to put the house up for sale for much less than that $150,000.
A short sale is now begun. Foreclosure proceedings usually take more time than putting a house on the market as a short sale.
The short-sale process is more complicated than a regular sale.
Short sales often require multiple level of approvals. Debts to a homeowner's association or a second mortgage are sometimes found with short sales. There may be other creditors also, such as the tax assessor, who must also approve the sale price.
The wide array of possible creditors, parameters and processes involved in a short sale makes it a relatively complex and highly-specialized type of real estate transaction.
Short sales are subject to failure more often than other types of sales because by the time all the creditors and requirements are satisfied enough time has elapsed that the property goes into foreclosure. Contiguous agreement between the lender and the homeowner is necessary for the house to remain on the market as a short sale. For instance, the homeowner may decide to try to refinance in order to keep the house, or he may decide the short sale is too difficult and settle for foreclosure. On the other side, the lending institution may decide to remove the house from short sale because it wants to try to work with the owner so he can keep the house. The complexities of purchasing on a short sale basis are in some ways similar to those of buying a foreclosed property.
Therefore, completing a short sale involves a longer time period and may entail more delays than the sale of a home on a non-short basis. For this and other reasons, homes up for short sale will be prices below market value. As with the purchase of any real estate property, you will want to do many things before you sign on the dotted line. You will need to have your funding readily available. You will want your own inspection of the home and its property.
You will need to check for those second- or third-tier creditors. Finding out how much the current owner paid for the property, and the value of similar homes in the neighborhood, is a good idea.
As you can see, buying a short sale property is very complex and it is not advised that you do so without help. A real estate agency that specializes in short sales will be very helpful when it comes to negotiating your purchase. If the real estate agency does not offer you one, ask for the assistance of a buyer's agent. A buyer's agent is specially trained to make the buying process as easy as possible. Jerry Guy is a licensed Realtor who specializes in helping his clients find residences throughout the region, including the Brandon, Florida real estate and Tampa real estate markets. He has extensive knowledge of a range of properties including the highly-specialized categories of foreclosure, REO, Waterfront and Luxury Home properties. Whether you are undergoing military relocation or searching for homes in the Tampa Bay Area for sale to accommodate you and your family, our services can prove invaluable to your success. For more information, please visit Jerry's website at www.JerryGuyBuyersAgent.com.
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A short sale of a real estate property refers to selling it when the asking price is lower than the amount due on a mortgage.
A short sale is often the result of a homeowner being unable to keep up with his mortgage payments.
Rather than force the property into foreclosure, a lender will sometimes opt for the short sale. For example, let's say a homeowner has $150,000 mortgage due on a house, and can no longer make his payments. He and the institution that holds his loan might agree to put the house up for sale for much less than that $150,000.
A short sale is now begun. Short-selling typically takes less time and is less expensive than foreclosure proceedings.
A short sale still takes longer than a 'regular' sale.
Multiple levels of approvals are commonly needed for short sales. Other debts that may be involved include a second mortgage or back dues to a homeowner's association. Agreement of still more creditors, such as tax assessors must be reached before a property can be listed on a short sale basis.
The wide array of possible creditors, parameters and processes involved in a short sale makes it a relatively complex and highly-specialized type of real estate transaction.
Not surprisingly, short sale deals have a high failure rate and often do not close in time to prevent foreclosure. Contiguous agreement between the lender and the homeowner is necessary for the house to remain on the market as a short sale. The homeowner may decide to try to retain the property through refinance, or he may simply opt for foreclosure. The bank may renege as well if they decide they want to continue negotiating with the current borrower, or if they disapprove of the sale price. As a perspective buyer of a short sale property, you will find that the process is in some ways similar to buying a foreclosed home.
The purchase of a home on a short sale basis is therefore subject to delays and usually is one of the longer real estate transactions in terms of time to completion. For this reason, among others, you should pay a price that is below market value when buying a short sale property. Before signing on the dotted line, there is a lot more to be done even after the status of the short sale has been verified successfully. You will need to have your funding readily available. It is just as important to have a short sale property inspected as it is to have any new home inspected.
You will need to check for any additional creditors, just to be sure. You will want to find out what similar homes in the neighborhood go for, as well as what the current owner paid for it.
Because there are so many variables involved in purchasing on a short-sale basis, handling one alone is not advised. Negotiating your purchase will be made much easier if you hire an experienced real estate firm that specializes in this area. It is also a good idea to request a buyer's agent for the transaction. The success of your purchase is the goal of this agent, use him well. Jerry Guy is a licensed Realtor who specializes in helping his clients find residences throughout the region, including the Brandon, Florida real estate and Tampa real estate markets. He has extensive knowledge of a range of properties including the highly-specialized categories of foreclosure, REO, Waterfront and Luxury Home properties. Whether you are undergoing military relocation or searching for homes in the Tampa Bay Area for sale to accommodate you and your family, our services can prove invaluable to your success. For more information, please visit Jerry's website at www.JerryGuyBuyersAgent.com.