When you're up to your elbows in jargon, idioms, and the practical vocabulary of any specific industry, you can forget the fact that not everyone on earth knows what you're talking about. So here's a bit of an introduction to short sales for those of you who are (rightly so) confused about the terms and ideas you may hear around the water cooler.
A short sale is a sale of real property (typically your house) from which proceeds are less than the balance of debts secured by liens (your mortgage or mortgages) against the property. If the property owner cannot (or isn't willing to) afford to completely repay the liens, and the lien holder(s) agrees to release it's lien on the property and accept less than the amount owed on the note, you have an approved short sale.
If it was that simple, they'd all be done and gone. The short sale process is certainly not that simple...nor that easy. Although short sales have been part of the real estate industry forever, they can be quite complicated. Today's real estate market, still heavily weighted with short sales, demands a much, MUCH higher level of expertise than in the past. It is your agent's job to keep you informed, advised, and most of all protected. If you don't think you're receiving that level of service...fire them!
I've seen many, many homes that should have closed as a short sale (or short pay transaction) not get approved, ultimately resulting in the foreclosure of the listed property. There are far too many people I've bumped into over the last few months who've obviously had their short-sales mishandled. This failure to close and subsequent foreclosure is often accompanied by buckets full of heart-ache and resentment by all parties involved. After your deal is botched is NOT the time to start asking questions. That's why I'm here. Click here to e-mail me a questions directly.
First let me start out by reiterating very crudely and simply that a short sale is when a property is sold at a price that leaves the seller "short" on funds to close. Example: The seller's mortgage balance is $655,000 but the home's current market value is $415,000. There's a $240,000 deficiency which makes this a short sale; a sale short of the balance of the debt.
Secondly, let's clear up the difference between a "Bank" and an "Investor". B of A, Chase, Citi, Wells Fargo.or J.P. What's his name...(whatever name they've slapped on the front of your branch at the local strip mall)...may or may not be the investor behind your mortgage(s). These enormous multinational corporations 'service" the loan for the investors. Who are the investors? You've got a better chance of having a dinner on Beale St. with the Elvis than ever learning who the investors are. OH...but if you did...your debt would probably be sold to another 'investor' before you got approval for the servicing bank anyway. It's best to just drop it. Do what the servicing bank says, do it now, and do it right the first time. The bank will, in turn, smile and move things along smoothly.
Lastly, a short sale is a complete misnomer. They are typically not short. That said, I've have them approved in as few as 8 days, and as long as several months. The length of time it takes for approval depends on many things including the competency and speed of the following:
I've seen many, many homes that should have closed as a short sale (or short pay transaction) not get approved, ultimately resulting in the foreclosure of the listed property. There are far too many people I've bumped into over the last few months who've obviously had their short-sales mishandled. This failure to close and subsequent foreclosure is often accompanied by buckets full of heart-ache and resentment by all parties involved. After your deal is botched is NOT the time to start asking questions. That's why I'm here. Click here to e-mail me a questions directly.
- What is a short sale
- Banks -vs- Investors
- Why do banks take so long to approve the seemingly misnamed "Short Sale?"
First let me start out by reiterating very crudely and simply that a short sale is when a property is sold at a price that leaves the seller "short" on funds to close. Example: The seller's mortgage balance is $655,000 but the home's current market value is $415,000. There's a $240,000 deficiency which makes this a short sale; a sale short of the balance of the debt.
Secondly, let's clear up the difference between a "Bank" and an "Investor". B of A, Chase, Citi, Wells Fargo.or J.P. What's his name...(whatever name they've slapped on the front of your branch at the local strip mall)...may or may not be the investor behind your mortgage(s). These enormous multinational corporations 'service" the loan for the investors. Who are the investors? You've got a better chance of having a dinner on Beale St. with the Elvis than ever learning who the investors are. OH...but if you did...your debt would probably be sold to another 'investor' before you got approval for the servicing bank anyway. It's best to just drop it. Do what the servicing bank says, do it now, and do it right the first time. The bank will, in turn, smile and move things along smoothly.
Lastly, a short sale is a complete misnomer. They are typically not short. That said, I've have them approved in as few as 8 days, and as long as several months. The length of time it takes for approval depends on many things including the competency and speed of the following:
- The listing agent
- Possible third party negotiators
- The servicing banks' document collectors
- Your single point of contact at each bank
- The time it takes for internal approval
- The time it takes for final review and a decision by the investors
- Possible counter offers
- Changes on HUD statements from Title
- and on and on and on.
These are just a few thoughts that will help you get up to speed with the terms and complex nature of the short sale process. With all of this in mind, remember this: Getting your short sale approved is completely irrelevant if you can't get it to close!
Tips and Strategies for getting your short sale to close will follow this post.
As always, I'll leave you with a little taste of wisdom:
“You will get all you want in life, if you help enough other people get what they want.”
~ Zig Ziglar RIP
Until next time, and thank you in advance for remembering me when the topic of real estate arises.
Email me at andy.blasquez@gmail.com
Click here to reach Macky Hensel.
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Finally, please comment or ask questions. Other readers may be wondering the same thing. I love the feedback, critical or otherwise, and love the interaction: I love this job.
Click here to reach Macky Hensel.
Please Follow me on Twitter and Re-Tweet these blogs.
Please Add me as a friend on Facebook
Finally, please comment or ask questions. Other readers may be wondering the same thing. I love the feedback, critical or otherwise, and love the interaction: I love this job.
Thank you always for your support.
Avoiding the Dirty Dozen Barriers to Short Sale Success » Print. ...
ReplyDeleteshort sale
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