Does it make sense to do a short sale?
Posted by John Barrett on September 16, 2009
In this economy, short sales have become much more common. They can also be very confusing to buyers and sellers as well as real estate agents. A good explanation of a short sale is a property that sells at market value, which is the best value available at the time of sale. If the value is lower than what is owed, it is up to the real estate agent to contact the bank or banks that have mortgages, liens, or attachments on the property and coordinate mortgages or liens to equal the value of the home.
This is accomplished by educating the banks holding liens that:
- Sellers have no other way of coming up with the difference between the sale price and what is owed. They have no savings to pay the difference.
- The property is only valued at a certain price, and it will take years to get back to the price needed to pay of the liens and mortgages.
The bank may have a seller sign an unsecured loan for the difference. This protects the bank and its stockholders. The real estate agent needs to keep in touch with all parties as much as possible. Short sales take two to five months to consummate, and buyers and sellers become weary quickly. This process takes time.
Short sales are great for buyers who have no problems with financing, that can wait for a special opportunity. Right now you can get some remarkable deals on Cape Cod if you go the short sale route.
A short sale is also the best way to rid yourself of a property causing a financial burden. It will prevent a foreclosure on your credit.
