Understanding the Nature Of A Short SaleTopic: Real Estate Technology
There is a new buzz word being used in the real estate world nowadays. That word is short sale. A short sale is a sale price that has been set a the homeowner at a reduced price to move a home quickly without all of the normal parameters of a closing a real estate deal.
Short sales come in one of two forms and are typically encountered when a homeowner is behind in their mortgage and have been sent a notice from the bank that the home is being foreclosed on and that a date has been set for the public auction of the house.
As the threat of foreclosure looms over the homeowner a short sales gives them a quick way out of their financial downfall. However, the owner does need to negotiate with the bank on what amount the bank will accept for the house to forgive the remainder of the debt.
Usually the negotiation process is simple and short, thus the terminology, a short sale. However, if a homeowner owes more that the value of the home due to overspending or refinancing to pull equity out of the house the bank may take up to six months to negotiate the sale of the home.
The good news for the owner that is selling the property is that they still occupy the home without any additional penalty while the negotiations are being sorted out. For a patient buyer a short sale can save money on the purchase of a home as the sales price is usually below market value for the property.
The other type of short sale works in much the same way except as the first short sale, except that instead of the home owner setting the price and negotiating with the bank, the bank has already taken possession of the house and gone through the foreclosure process, evicting the delinquent tenants along the way. The bank then sets an approved price for the house that they will accept.
Bank approved short sales move quickly as all of the negotiation is already done and the bank need only accept serious offers for the vacant home. Bank approved short sales are rarely on the market for a day or two as eager buyers are ready to move on these properties and have pre-qualification letters to support their offers.
The real difference in a short sales and a regular sale of a home is that the short sales specifies that a house is in as is condition and no work will be done by the seller to bring the house up to regular selling standards. In some cases houses that are vacant may need to be cleaned or have minor repair work done to them to make them livable for the buyer. In either case of a short sale the buyer is assured to get a good deal on the home even with any repair work that may be required.
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