What is a Short Sale in Real Estate???
The real estate market has over the years, evolved several mechanisms for the purchase and sale of properties. Short sale of a property is one such mechanism to overcome financial disruptions. Short sale is defined as the sale that takes place, when a property is sold at a price that is lesser than the amount owed to its mortgage. A short sale can be beneficial to a buyer looking to get a good deal on a home and is willing to wait the length of the process that can sometimes take a couple of moths. On the seller’s side the short sale enables them to sell their home and avoid foreclosure in the process. Even if the buyers and sellers agree to the sale the sale can happen only if the lenders of the project also approve. Let us now proceed to understand the concept of this short sale with an example.
Suppose a home in Lake Conroe, Houston, is facing a foreclosure. The owner of such a property has to go through several procedural steps, during this process of foreclosure. So what exactly are these steps?
STEP 1: Create a ‘for sale’ listing with an agent on a multi listing, at a fair market value. This fair market price should be a reasonable price for such a property and the owner should be able to find a suitable buyer within a few weeks to a month. The object at this point is to list the home at a great price so that a potential buyer of the home can be found.
STEP 2: Process the short sale, once a secured buyer is identified. Now begins the crucial and pivotal role of the realtor. One of the most important things that will have to be kept in mind during the process is that it is not essential that they should prime for the highest price. Because in a short sale, the lender would prefer a quick sale, so that he could just wash his hands away, from a poor investment. The real estate deal needs to be closed within a period of 60 to 70 days.
STEP 3: The realtor should collect all the relevant details and documents from the house owner. Then these will have to be submitted to the loss mitigator or LM of the lender. These documents will then be studied by the LM and another official of the Broker’s Price Opinion (BPO), along with the lender’s consent. The first 2 steps of the process should happen fairly quickly because most of the time will be spent from here on talking and negotiating with the lender over the details of the sale.
STEP 4: Meeting with the BPO official. This is the most important step because, unless the BPO too agrees to the offer price from the buyer, the sale of the home can not take place. This is where your Realtor will play a pivotal role since his experience and perseverance can make the difference between a successful sale and a foreclosure. Depending on the bank that holds the mortgage of the property the waiting time of this step will vary greatly. For example, if the bank holding the current mortgage is Bank of America you should expect to wait considerably longer than with other companies.
STEP 5: After complete approval from the lender the buyers and sellers go forward with transaction for the home. Both parties signed the necessary paperwork the old lender is paid off and the new lender will grant the new short sale property title to the new home owners.
Obviously the short sale process is a complicated one and that’s why its so important to work with a Realtor that knows and understands the process. Over the next couple of days I will be making a couple of more Short Sale guides one from the sellers side and one for the buyers.
Search for Homes on Lake Conroe
In: Lake Conroe Homes, Montgomery County, lake conroe, real estate · Tagged with: foreclosure, lake conroe, lenders, mortgage, realtor, selling a home, short sale
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