The 5 W's Made Simple
What is a Short Sale? Simply put, a short sale, in residential real estate, is where a property (examples, a house, a condo, a townhouse, or even land) is sold from the current owner(s) to a new owner(s) for less than what is owed on the that property by the lender(s) who the selling owner(s) borrowed their loan(s) from.
Why should a person in distress consider a short sale? There are many reasons to consider a short sale, however, each owners' situation is completely unique, therefore, always consult with an attorney and a tax professional prior to ever listing your property. Foreclosing, claiming bankruptcy, or modifying your loan may be better alternatives, however, many times, they are not. A few common reasons I have witnessed in the past in which Sellers greatly benefited from short sales are as follows:
Who is involved in a short sale? A short sale functions very similar to a regular real estate transaction in that everyone from a normal real estate transaction is involved i.e. the Buyer(s), the Seller(s), their agents, the loan personnel, the title personnel, the inspector, the appraiser etc... However, in addition, on the Seller's side of the transaction, the bank or banks that hold interest in the property are now also the "Sellers" along with the actual owner(s) who are listing the property for sale and who officially titled as the "Sellers". Without all banks' signatures, the sale can never be completed. For example, say a Seller bought the house a few years back using an adjustable rate mortgage (ARM) loan of 80 percent and 20 percent and then, a year later, took out a home equity line of credit for an additional 5%. Therefore, in this example, this short-sale transaction would have, The Buyer and their representative on one side of the exchange and The Seller's, Bank number one, Bank number two, and Bank number three with each of their representatives on the other side of the transaction. As you can see, short sales can get very complex, however, they have become much easier to complete over the past few years and are edging towards being accepted as "normal" by a growing community of people throughout our nation.
When is a short sale acceptable to the lender(s) involved with the property? It is a common misconception that you must be behind on your payments to initiate a short sale. This is completely untrue. What a seller does need is a "valid hardship", meaning something in their lives that was out of their control making it difficult or impossible to keep their property under the current loan terms. A few examples of hardships are as follows:
Where are short sales performed? Short sales have been commonly and successfully executed across the country for almost five years now. Throughout the Las Vegas Valley, where statistically, as of March 2011, one in nine homeowners are currently in foreclosure or have recently went through foreclosure, short sales are extremely common and are projected by many experts to continue to be a noticeable percentage of our current market property inventory for years to come.
How long do short sales take and How do I get started? Normally short sales take about 90 to 120 days to complete after an offer has been accepted by the Seller(s) whereas conventional sales take about 30 days to complete and Reo sales take about 30-45 days. To be fair, most short sales die because most buyers don't have the patience to wait around 2,3, 4+ months (we've seen short sales take more than 6 months before being completed), however, if you can overlook the obstacle of time, you really need a good team that does their homework and, even then, be prepared to expect the unexpected and roll with the punches. We are well rehearsed with obtaining short sale properties so please ask and we will answer any further questions.
If you are interested in going through the short sale process yourself or you have a friend or coworker in need, please contact us. We will discuss the options available to you and, if performing a short sale seems logical to you, our short sale partner and we will assist you in listing and marketing your home immediately. We may have one of my many awaiting Buyers ready to purchase your property. Who knows, perhaps after we speak, a loan modification may seem more beneficial to you or perhaps it's just best to foreclosure and/or claim bankruptcy, but, it's important to remember, each case is absolutely unique so contact us and I'll walk you through possibilities, you can consult with a few professionals, and, eventually, after intelligently contemplating, make an educated decision that is right for YOU!
***Disclosure: We am not a licensed attorney's nor are we a licensed tax profession, for all specific legal and taxation questions please consult with a licensed real estate or bankruptcy attorney and a licensed tax professional prior to embarking on any real estate related venture.***
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