In the case of a short sale, the seller asks the bank to keep an amount less than the amount owed. Even if you've made an offer and the seller has accepted it, it's not a done deal. The seller's bank must approve the sale, and this is where major delays can occur. Banks are losing money in a short sale and they don't like it too much.
Mortgage lenders won't stay in business for long if they lose money on all their home loans. While mortgage lenders consider offers from short-selling buyers, they are reflecting on the financial advantages and disadvantages of those offers. Mortgage lenders generally only accept a short buy offer when the offer makes more financial sense than foreclosure. Because mortgage lenders want to minimize their losses on home loans, they often look closely at short sales buyers' offers, which takes time.
Short sales may take longer than normal home sales due to the need for lender approval. The buyer can find another property while waiting for their response. If the short sale transaction takes place, check with the Internal Revenue Service (IRS) to see if you will have to pay deficit taxes. The term of a short sale varies from that of a traditional real estate transaction.
It can take weeks for the lender to decide on an offer. The lender will then issue an approval letter detailing the terms of the agreement. It can take up to 12 months for a lender to process a short sale package, including an offer from a viable buyer. At that time, the buyer must wait for approval from the lender.
If there is no response from the lender, it may be time for the interested buyer to move to a different home. A short sale can take as little as a few weeks or several months. Because short selling is complicated transactions, they tend to take longer. In addition, the original lender must review the short sale offer to determine if they will accept it.
If the lender believes they can make more money through the foreclosure process, they may not accept the short sale proposal. Homeowners who can continue to pay their mortgage while the short sale is taking place can avoid the worst credit impacts, which means that anyone trying to sell their home as a short sale must budget, plan and be prepared. Real estate professionals who have experience in short selling often find it easier to navigate the complex process of selling or buying a short sale. A typical short sale involves a series of steps, generally in this order, according to Bobbi Dempsey, co-author of “The Complete Idiot's Guide to Buying Foreclosures”.
While you'll want to sell your property as close to market value as possible (and your lender will agree), don't forget what led you to organize a short sale in the first place. A short sale is usually a sign of a struggling homeowner who needs to sell the property before the lender seizes it in a foreclosure. For the most part, everyone makes some kind of profit from a short sale, although everyone also gives up a bit. When setting a sale price, be sure to include the cost of selling the property in the total amount of money you need to get out of the sale.
If you're looking to buy a home and buying a short sale seems like something you'd be interested in, you can start online or talk to a home loan expert today. In a short sale, the transaction profits are less than the amount the seller needs to pay off the mortgage debt and selling costs. The decision to proceed with a short sale depends on your individual situation and what is likely to work best for you in the long term. Short sales are usually sales as is, so inspections will generally be conducted as a reference and not as a negotiating tool.
In many cases, short sale homes are in a reasonable condition, and while the purchase price may be higher than that of a foreclosure, the costs of making the home marketable can be much lower and the disadvantages for the seller less severe. The bottom line is that short selling takes a long time to complete in both the selling and buying processes, and it's difficult to determine an exact time frame. For a buyer, the short selling process involves a long period of waiting for the lender to confirm and respond to the documents. To sell the house as a short sale, the homeowner begins the process by submitting a package, as required by the bank, which includes information about the owner's finances, information about the home's market value and the particular difficulties faced by the owner that would turn short selling into necessity.
It can take weeks or months for a lender to approve a short sale, and many buyers who submit an offer end up canceling because the process takes too long. . .