Have you ever heard Realtors complain about short sales? There is endless paperwork, they take forever, no one at the bank returns their calls or answers their emails – the list goes on and on.
So, why do I love short sales? Because in my work, there is no more satisfying way to help a seller out of a distressed situation while helping a buyer find a really great house. Short sales are a win-win situation for both the seller and buyer.
For the Seller:
- Yes, there is some paperwork. You will be asked to furnish tax returns, bank statements, pay stubs, as well as a financial worksheet and a letter explaining your financial hardship.
- In a short sale, a seller does not take away any money at closing; nor does he have to bring any money to the closing (unless negotiated with his lender). If someone asks you to pay in advance to help you with a short sale, don’t do it. It is most likely a scam!
For the Buyer:
- Your purchase and sale agreement is negotiated between you and the seller, but will be subject to the seller’s lender approving the reduced pay-off. The time it takes for the seller’s lender (or lenders) to approve the short sale can take between 2-3 weeks and 9 months or more! If you need to be into a new home immediately, then a short sale may not be a good idea.
- It is important to work with a Realtor who understands the short sale process. You want to be certain that once accepted, your offer will be the only offer presented to the bank.
In summary: For a seller who wants or needs to sell and owes more on his home than it is worth, a short sale is almost always the best solution. Quite often, the seller is able to negotiate total debt forgiveness on the unpaid portion of his loan.
For a buyer who has a flexible time schedule, purchasing a home offered as a short sale can offer a great value and instant equity.
For more information on Short Sales vs Foreclosures, please visit my website.