What is a Short Sale:
- A short sale is an alternative to foreclosure, intended for property owners who can no longer make payments and cannot sell through conventional means due to the property’s current market value being less than the outstanding loan amount.
Bank Cooperation and Buyer Requirements:
- Not all banks cooperate with short sales. Those that do typically require a pre-approved, non-contingent buyer who has submitted a signed purchase offer for the property.
Short Sale Approval Process:
- The short sale approval process involves a property appraisal to determine its current value.
- Banks may consider accepting less than the owed amount to avoid the expenses associated with a foreclosure proceeding, such as attorney fees, taxes, and bills.
Considerations for Buyers in Short Sales:
- Time Limit on Purchase Offer:
- Buyers should include a time limit in their purchase offer, clearly stating that the offer is subject to short sale approval no later than a specified date (e.g., one month).
- Deposit Amount:
- Buyers are advised to be conservative with the deposit amount, considering potential delays in the short sale process that could tie up funds indefinitely.
- Home Inspection:
- Banks typically require a home inspection as part of the short sale process. Buyers should schedule a professional inspection for their own protection.
- Communication with Experts:
- Given the complexity of short sales, buyers are encouraged to seek guidance and advice from real estate professionals or legal experts to navigate the intricacies of the process.
Understanding the specific requirements, timelines, and potential challenges is crucial for both sellers and buyers in this type of real estate transaction. If you have have questions about the often complicated short sale, please do not hesitate to contact our office.