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Short Sales, The Good News About A Bad Thing…
By Tisza Major-Posner | September 23, 2007
Hi All,
If you are listening to the news, reading the papers or watching the Internet you have probably run across the term “Short Sale”. But, what is a Short Sale? Is it a good thing or a bad thing? And, most importantly, if you are facing one, what is the good news about the situation and what is the bad news.
What is a Short Sale? A Short Sale is the selling of a property for less than you owe on it and also requires asking the lender’s to forgive the difference between what they are owed and what the property can currently be sold for.
With property values fluctuating and with lots of folks with adjustable rate mortgages seeing their interest rates resetting themselves from barely affordable to out of the ballpark, the Short Sale is fast becoming a fixture in the purchasing landscape.
Is a Short Sale a good thing or a bad thing? Well, I guess that really depends upon which side of the fence you are viewing it from. If you are a homeowner facing the loss of your home and your investment and the utter devastation that a foreclosure will reek upon your credit for the next seven to ten years, then a Short Sale is indeed the lesser of the two evils.
Don’t misunderstand, a Short Sale does have negative repercussions and will do harm to your credit. But, it will only remain on your credit report for around three years as opposed to the Foreclosure which has a much longer negative life span.
If you are a lender faced with forgiving a portion of the debt owed to you in lieu of facing additional losses while waiting for the distressed property to go through the entire foreclosure process and then having to also absorb the cost of the foreclosure sale as well, then a short sale is a preferable solution.
If you are a buyer looking for the home of your dreams, you may find it via the Short Sale market, but be warned - Short Sale’s do not run on the same time-frame that an average sale does. What you may realize in savings on the home, you will pay for with the extra time necessary to complete the sale.
Remember, in a Short Sale there are three parties minimum in the decision making process - The Seller, The Buyer and The Lender or Lenders. Even after the buyer and the seller have arrived at an agreement the lender or lender’s need to agree to whatever the seller accepted offer is, since it is ultimately the lender whose money is involved and ultimately the lender who is being asked to forgive the outstanding debt.
So, here’s some of the good news in a Short Sale… Because it takes time for the Lender to respond after the offer is sent to them, it means that until the Lender says an offer is accepted the games continue. After the offer is accepted by the lender then the time-frames usually observed in a normal sale apply.
Short Sales are challenging and can try your patience, but the reward out ways the irritations. Saving yourself years of credit repair, helping the lender’s recover some of their losses and helping the buyer find a home they are happy with can make this lemon of a situation into lemonade.
So, if you are in over your head with no end in sight, don’t let your home go into foreclosure, call an agent like me with experience in the Short Sale process and see if I can help you.
Take care and have a wonderful day,
Topics: Buying and Selling Tips, Buyer Must Read's, Seller Must Read's |
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September 24th, 2007 at 12:14 am
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May 12th, 2009 at 6:59 pm
One of the best things about a short sale that is often overlooked is the fact that you are genuinely helping a home owner out of a potentially bad situation. Some will argue that bank owned properties are the way to go, but they have already been foreclosed on and offer no relief to a home seller like a short sale!