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Go with "RO" for ALL your Real Estate Needs !
Short Sale -- What's that and how does if affect me?You may have heard the term short sale and are wondering just what that is? Well, in a nutshell it means that the house is up for sale and that the asking price is less than the current owner/seller owes on their mortgage. What does that have to do with me if I'm considering buying a home? In order for a person to sell their home they must be able to provide a clear title and deed. If the home has a mortgage on it then that mortgage must be paid off in full at the time of the sale’s closing in order to provide the clear title and deed. Since the asking price is less than the owner/seller owes his mortgage co. , the seller will have to get the mortgage co.’s permission to agree to let the seller sell the house “short” of what he owes to provide a clear title. How does this work in selling/purchasing a Short Sale listed Property? The property is listed for sale as “short sale”. A buyer writes an offer to purchase this short sale property using the standard real estate purchase contract with an addendum attached/included to the contract known as Short Sale Addendum. This addendum outlines the terms and conditions of the sale relevant to the short sale part of the deal. Seller then reviews the purchase offer contract & addendum and accepts the offer. Now according to the contract/addendum the seller must present the offer to his mortgage holder and seek their approval of the sale “short “ of the amount needed to payoff the existing mortgage. Here’s where this affects the buyer. The sellers mortgage co. may take weeks or even months to say yes or no to the short sale. So a buyer must be prepared to wait for this answer. Also understand that the owner/seller is in a situation where they are most likely not able to continue making their house pymts and are in financial distress. In most cases the seller is therefore not in a position to make repairs should the property have some issues. For the most part a buyer who is considering short sale properties should be prepared to purchase AS IS on these types of properties. The owner/seller’s mortgage co. will go through their processes to determine whether or not to allow this to short sale. It will include the mortgage co. paying for an independent appraisal, reviewing the sellers current financial condition to etc. Things to determine whether or not their best circumstance is to “eat” a loss on this home/mortgage. This takes time. If you are considering a short sale or foreclosure purchase Short sales can be a very good deal on price and often don’t have “condition’ problems, but the time frames can become frustrating and seem prolonged. There are up sides to a short sale and down sides as well Is there a first and second mortgage on the property? Has the seller started any communication with the mortgage co. to see what their situation is? What about usual buyer things to do ? Inspections? Escrow? Earnest money? Loan preapprovals ? etc….. How these types of purchases affect you ? What you need to do to be in position to make offers on these types of properties etc. Since there is more to both of these types of transactions that you should take into consideration we should talk more in depth about just what your looking to accomplish. This article is just to give you some of the basic items in regards to short sale properties. We should talk in person or via phone to make sure that you understand all the issues and procedures with these types of purchase See also my article on Buying a foreclosure.
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