In brief – a “short sale” refers to a situation where market value on a home is less than the mortgage they owe, and a third party (lien holder, mortgage holder (bank/lender), and or tax entity) must grant the homeowner approval to sell for less than the amount owed.
It is typically advantageous for a financially distressed homeowner to short sale their home vs. losing the home through foreclosure – eviction is avoided and credit ramifications are reduced. Qualifying for HAFA – Home Affordable Foreclosure Alternatives program – (and many/most people do), can provide additional benefits of $3000 relocation assistance and a deficiency waiver (the bank will not pursue you for the “shorted” amount at a later time).
In order to qualify for any short sale, a homeowner must have a hardship other than just a decline in their property’s value. A hardship may be job loss, reduced work hours, divorce, sickness, death of spouse etc… The homeowner (generally helped by their Realtor) submits a hardship package to the third party for short sale approval.
Short sale impact on a buyer: Because a short sale involves 3 players – the homeowner, the third party (bank) and the buyer, a home purchase can be complicated. Buyers should:
- Expect Delays: After a purchase agreement has been made by the homeowner and the buyer, a short sale requires written approval by the third party/parties. The third party may do any number of things: they might not respond at all – or take months to respond, they may reject the agreement outright, or they may modify the agreement completely.
- Expect Uncertainty: The Third Parties may require the seller to keep the property on the market even after the buyer and seller have agreed to terms of a proposed purchase contract. They may not respond to the short sale until they have seen a number of back-up offers…
I recently read an article where short sales were likened to Forrest Gump and his Box of Chocolates – very apropos! They can be quick and easy or lengthy and frustrating and sometimes they fail altogether.
How does this relate to the Cache Valley Real Estate Market? In Cache Valley, Utah in 2011, out of 899 homes sold, 34 were short sales; with an average sold per foot price of $68 (well below the standard price per foot) proving that for buyers with flexible time frames and patience – short sales can be a great buy!
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- Are You The Right Buyer For A Short Sale? (realtorkaera.wordpress.com)
- What Does Short Sale Mean? (batonrougehousing.wordpress.com)
- Short Sales To Get Easier and Faster if New Proposed Bill Passes (prweb.com)
- AZ HB2584 Short Sale Provision Would Expand Consumer Protections, But Will Elected Officials Derail It? (prweb.com)
- DSnews.com: Short Sales Bring 24% Greater Returns than Foreclosures (foreclosure-avoidance.com)
- Fort Collins Short Sales: Why Persistence Is So Important In Success At Short Sales (robkittle.wordpress.com)
- 10 Cities Where Homebuyers Can Get Steals On Short Sales (businessinsider.com)
- Are Short Sales Really Better Than Foreclosure? – Finance – Mortgage (rawbusinesslaw.com)