What is a short sale? "A short sale is a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance due on the loan. A short sale may or may not involve a property in foreclosure."
A short sale occurs when a lender agrees to write off the portion of a mortgage that is higher than the value of the home (an "upside down" mortgage), provided a buyer is willing to purchase the property.
A short sale is a difficult consumer real estate transaction to approve and involves as much, if not more paperwork than an original mortgage application.
How long does it take to complete a short sale?
Although response times vary from lender to lender, it can take two weeks or as long as 60 days to receive an approval of a short sale from a lender. That’s why it’s critical that buyers and their representative understand and accept that time frame before they make an offer.
Tip: Keep in mind that the purchase contract on a short-sale property is a legally binding agreement once the earnest money has been deposited.
Are short sales for You?
With many more adjustable rate mortgages ready to reset to higher loan amounts in the next couple of years, short sales represent a growing sector of the market. However, because sales are time consuming, they aren’t for everyone. "I always say that if you’re going to succeed in short sales, you need the 3 Ps — patience, persistence, and problem solving,"
A successful short sale does not happen quickly
If you are considering buying a short sale, there could be drawbacks. For your protection, I suggest that all borrowers · Obtain legal advice from a competent real estate lawyer
· Call an accountant to discuss tax ramifications
As a real estate agent, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences.