| A buyer says they want to buy a short sale because | | | | appraisal on the home. |
| they've heard they can get a good deal that way. | | | | The homeowner doesn't care what the selling price is |
| What is a short sale, really? | | | | because they have nothing to gain. This often leads to |
| Let's say a homeowner bought a house for $500,000 | | | | artificially low, or simply fictitious selling prices on short |
| but the market has declined so the house's value has | | | | sale homes. While this may attract more people to |
| fallen to $400,000. Now the homeowner us upside | | | | make offers on the home, the effort is wasted |
| down with a loan near $500,000 and possibly even | | | | because the prices are not real selling prices. |
| more with some negative amortization loans, and a | | | | Further, sometimes the price has to be high enough for |
| resale value at $400,000. Rather than being foreclosed | | | | a partial recovery of the homeowner's bad debt as |
| on because there are so many homes in this situation, | | | | well. Each party, the seller, the mortgage holder and |
| the bank knows that if they foreclose on the house, | | | | the buyer have to negotiate and agree to the terms of |
| they'll simply start at market value, which could be now | | | | the sale. Each party has a number of "outs" where |
| as low as $370,000. | | | | they can escape the sale and prevent the sale. Even |
| Then they must proceed with foreclosure and its | | | | the seller may refuse the deal when they read the fine |
| related expenses, insure the home, pay for repairs and | | | | print and realize they are not obtaining a full release |
| restoration since most homeowners are too financially | | | | from the bank of their liability. |
| distressed to perform usual maintenance on the home. | | | | In practice, a short sale offer, properly written up by a |
| The foreclosure process can take up to a year. | | | | competent real estate agent can act as an option to |
| Rather than go through the unprofitable course of | | | | buy a home. The offer, properly written will not require |
| foreclosure, the bank will agree to forgive a portion of | | | | a down payment so that if all parties agree on the |
| the debt or all the remaining debt if the homeowner will | | | | sale, it can work well for everyone. The buyer has a |
| sell the home at market value. | | | | ten day window to evaluate the deal and the home |
| Buying a "short sale" or pre-foreclosure home can | | | | and can retract with absolutely no penalty. |
| incur a lot of wait time adding up to several months, | | | | Finding a good searchable real estate website helps |
| especially if the processor involved is doing a poor job | | | | with the short sale process for buyers. If the website |
| or if the homeowner is trying to do too much of the | | | | allows for filtering down to short sales only, that can |
| sale themselves. When a buyer makes an offer on | | | | help narrow down the search to the right kind of |
| the home, the mortgage holder or bank will order an | | | | properties for your venture. |