A few years ago my in laws got a great deal on a house because it was a short sale.
Short sales are what they sound like – home are sold for less than what the mortgage is for the property. Why would lenders agree to such a proposition? The motivation for lenders to go with this arrangement is to avoid a foreclosure which can be more expensive and longer to process.
On the other hand, the sellers are still on the hook for the reminder of the mortgage balance. If the balance is rather large and their income is still fixed, a short sale will only give them a small amount of relief.
Short Sale Process – The Basics
For those curious about how a short sale works, here’s a very basic summary of the process.
- Determine the value of property. Here’s where the lender sees if it’s better for them financially to proceed with a short sale at all or look at foreclosure.
- Get a short sale application. Lenders have to give the go ahead on this before borrowers can try and sell the house.
- Borrowers have to submit a hardship letter to their lender. They have to present a case of why having a short sale is the best move in this scenario. Including numbers and any relevant data make the case stronger, borrowers increase their chances of having a short sale.
- Borrowers have to find a buyer for their home. It’s a detailed process and for some, it involves a lot of back and forth negotiations.
- If accepted, then closing on the property occurs.
Thoughts on Short Sales
I’d love to get your thoughts on short sales – both the pros and cons of it for buyers and sellers. While the process was a bit of a headache, it was worth it in the end for them. They have a home they love at a price that works for their budget.
Photo Credit: love♡janine