A “Short Sale” means that the owner owes more than the home is listed for and is trying to sell it short of what they owe. The lender who holds the mortgage would have to approve the lower amount in order for the sale to go through. In addition to that, the seller would have to provide the lender documents proving that they have suffered a financial hardship.
The process can take up to 3 months or as long as 6 months from the time an offer is submitted to a decision is made on a property by the bank…occasionally it is less time. It just depends on the bank. Some banks are offering the seller the option to have their loan modified instead of selling it short. The risk for the buyer who makes in an offer is that if escrow was opened on the purchase and the buyer has incurred costs like an appraisal or home inspection and the seller chooses to modify their loan with the bank, then the seller may want to cancel. That may raise legal issues.
To summarize:
- Short sales can take up to 3 months or as long as six months to close escrow, so you need a lot of patience.
- Some banks are willing to grant the seller a short sale and some are not
- The seller may decide to accept the loan modification from their bank
Focus on Southern California foreclosures and properties that are not short sales or “pre-foreclosures”.
From the definition given, I would say that a short sale is the best solution when one is already finding difficulty in paying for his mortgage. The person who would resort to the short sale, though, should be convinced through and through so as to avoid any legal issue that might arise with a change of plan. It will help to seek the advice of lawyers. In our place in Canada, it is the estate lawyer Ottawa whom the people run to in scenarios like this.
Thanks for the explanation of a short sale. I didn’t realize they had to prove a situation of financial hardship to the lender. It makes sense, but I didn’t realize the logistics. It’s always a good idea to talk to a realtor like http://www.sequim-real-estate-blog.com about your specific situation though. There are usually a few unique quirks to every case.
The short sale process can take 3 to 6 months or longer…and there are no guarantees that the seller’s bank will approve the short sale.
How is your search for a home going?