When is a short sale a good idea?

In short, short sales are a good idea if you have plenty of time and money. A short sale buyer may get the property at a reduced price, but the property (in all likelihood) has its share of problems — think “fixer-upper” — and the deal needs to go through considerable red tape to make it happen.

Can a buyer buy a house in a short sale?

If you’re a buyer, a short sale can enable you to buy a property at a discount because the seller is distressed and has fewer options. But you’ll need to be patient because buying a property in a short sale may take some time.

How does the buying process work for a short sale?

The buying process for short sales is very different. First, the seller has to accept your offer. Then the listing agent will send the offer to the lender for acceptance; you do not have a deal until the lender accepts. The offer for a lender includes multiple documents in an effort for the seller to make a case for the short sale.

What happens if the seller refuses to do a short sale?

The seller of the property will normally have to pay some money at closing or agree to an unsecured debt in order to have the short sale approved. If the seller refuses, then a short sale may fall through even if the seller has approved the sale.

How long is the waiting period for a short sale?

Short sales (Fannie describes as pre-foreclosure sale), deed in lieu of foreclosure, or mortgage charge-off are treated the same. Each requires a 4 year waiting period, unless the reason was an extenuating circumstance. If documentation proves an extenuating circumstance, then the waiting period is only 2 years.

Are there any problems with financing a short sale?

As if short sales weren’t enough of a hassle to buy for most people, the type of financing a buyer uses has a huge impact on the sale, for a variety of reasons. If you try to get the wrong type of loan, even if your short sale is approved by the seller’s bank, you might not be able to close that transaction because of financing problems.

What does it mean to be approved for short sale?

“Approved for short sale” means the bank has already determined that the homeowner qualifies for a short sale and has approved the request to sell the property at a reduced price. It is possible that an earlier buyer made an offer that was approved, but did not close the transaction.

Is it bad to short sell your house?

The short sale process has become common practice for homeowners in less than perfect financial standing, and for good reason: it’s indicative of a borrower’s impending inability to pay down their mortgage. However, contrary to popular belief, short sales are anything but bad; they are simply associated with an unfortunate situation.

What happens if the bank denies a short sale?

The bank will approve, counter-offer, or deny the short sale. If the buyer’s offer price is in line with the appraised value, it’s more likely to get accepted. Once all three parties have agreed, and everything is in writing and officially recorded, then it is on to closing.

What are the steps to short sale?

The Short Sale Process For Sellers. The short sale process for sellers can be broken down into five simple steps: Identify the current situation. Demonstrate provable financial hardship. Enlist the services of a qualified agent. Gather the appropriate documents.

Why do short sales take so long?

Short sales happen because the loan amount on the property is higher than the sale price minus all the sale expenses. In a short sale, the seller is asking the bank to take less than the amount owed. Here’s a look at why short sales can take so long. 1. The seller’s bank must review the package In order…

What is the definition of a short sale?

Updated Jun 25, 2019. A short sale is the sale of an asset or stock the seller does not own. It is generally a transaction in which an investor sells borrowed securities in anticipation of a price decline; the seller is then required to return an equal number of shares at some point in the future.

What is a short sale process?

A short sale is a process in which the lender allows the homeowner to sell his house for less than the value he owes on the mortgage. It is a substantial discount is given to the home to let it get sold fast.