Short Sales FAQ

Q. I keep hearing the term short sale. What is a short sale?

A. A short sale is a relatively new term which loosely translated means “pre-foreclosure sale.” When you see a short-sale listed, you can assume that the lender may agree to accept proceeds from the sale as“payment-in-full” even though the original mortgage may have been substantially more than the current asking price. Lenders may do this for a variety of reasons including local market conditions, the property’s physical condition and/or the original borrower’s declining financial position.

 

Q. Are short-sales legal?

A. Yes, short-sales are perfectly legal. However, before a clear title can be transferred to the new buyer all mortgages, judgments, taxes and other encumbrances must be paid. Lenders must agree in advance to accept the lower payoff amount as payment-in-full of all encumbrances. Short-sales can help save the credit of the seller and they can be a great value for potential buyers.

 

Q. I may be interested in purchasing a short-sale property. Are there many short-sale opportunities in our area?

A. Yes, there are quite a few opportunities available. However, keep in mind that most lenders will only approve a short-sale as the last resort before foreclosure. Most lien holders and banks have very strict policies on who qualifies for a short-sale.

 

Q. I think I might qualify for a short-sale on my home. Can I list my property as a short-sale? I live in one of the following counties: Manatee, Sarasota, Hillsborough.

A. You may be eligible to list your property as a short-sale. Please feel free to call our office and we’ll put you in touch with an attorney that specializes in these types of transactions. Conditions that may help your home qualify for short-sale status are:

  • Your declining financial situation
  • You must be current on your mortgage
  • Your property value has decreased significantly due to the economic conditions of the local or national market
  • Your property value has declined because of its physical condition and therefore not marketable
  • Your property was refinanced based on an inflated property appraisal
  • Your property, if sold at foreclosure, could be sold for less than the proposed short-sale price

 

Q. It looks like I will probably qualify, now what?

A. Once you’ve discussed your situation with an attorney, the next step is to present your financial situation to your lender. Be sure to compare the proposed cost of your short-sale to what could happen if you go to foreclosure. Be prepared to talk about local market conditions and you may even want to involve a Realtor with the process. A Realtor can help you with appraisals and local market research as well as act as your selling agent if the bank approves your situation. If approved, marketing your sort-sale property will be key to selling it!

 

Q. I’m interested in buying a home listed as a short-sale, what can I expect during the process?

A. Be prepared for a long process. Each lender works at a different pace. While some approvals may take days, others may take weeks. A short-sale may be a good investment but it can be a nail-biter. If you need a house quickly, this may not be the best purchase opportunity for you. To make sure your transaction is as successful as possible; make sure you follow these simple rules:

  • Become pre-qualified/ pre-approved.
  • Lenders are much more likely to take your offer seriously.
  • Know your top-dollar and be prepared to negotiate.
  • Prepare yourself for rejection.
  • Remember lenders do not have to approve the offer or listing price.
  • Relax, this could be a lengthy process.
  • If your Realtor hasn’t called you with an update, there probably isn’t one.
  • Enjoy! A successful bid for a short-sale can be very fulfilling. You often walk away with a great home at a great price.