Why is it called Short Sale, when it is everything... but SHORT???
Chris and Isa are first time home buyers. They are a super cute couple; young, professionals, and very smart, who are anxiously looking to start a family together, and that’s how I met them.. I am their Real Estate Agent!
We started the process with the right foot, Pre approved? Check!. They are the perfect client..They knew exactly what they wanted: A muti family home that would allow them to start their new life as a family, while having an extra income for years to come. Location? Yes, they knew that too. They need to be in a town with the school system that would provide early childcare for Isa’s daughter, and with easy access to main highways for Chris to commute to work. The perfect plan! Easy, right? Well, not really..
Since location was the most important factor, we had only very few towns that we could focus on. The market was crazy! Extremely competitive. We placed a few offers to several homes with no luck. E-V-E-R-Y single home was going for multiple offers and above asking price.
Tough times, call for shifting gears. Chris and Isa then decided to take in consideration single family homes; but now without the extra income that the multi family would provide, their budget was reduced a bit.
We found a property in Bethel that was perfect for them. They loved it! and it was right under their budget. The listing said SHORT SALE, bank is ready to go! This is it! This was the one!
We presented the offer, and after a few days of negotiation, their offer was accepted. Finally! After months of waiting for the right home, they had found it!
Well, This was in September... September 18th, 2018 to be exact. Those were the days that they thought they could possibly spend Christmas, or maybe New Years at their new home; and yet they are still waiting for the green light from the bank to be able to perform inspections, and then continue with the mortgage process. Are they anxious? yes. Are they upset? NO..
You see, homebuyers like Chris and Isa looking for a good deal on a property purchase can get a price break on a short sale - if they understand the short-sale process completely because this process is anything but SHORT.
So, What is Short Sale?
A short sale is when a home owner sells a property for less than the amount owed on their mortgage. In other words, the seller is "short" on the amount needed to fully repay the mortgage lender. Typically, the lender agrees to a short sale in order to recoup a portion of the mortgage loan owed to them, without incurring in the expense and hassle of Foreclosure.
How a Short Sale Works?
A home seller puts the property on the market, while designating the home for-sale as a potential "Subject to Short Sale”.
Once an offer is received, and accepted by the home owner, The bank is contacted (by the seller’s attorney), and completes an application for short sale. This application must be signed by the sellers and buyers.
Unfortunately, There is no guarantee that the bank will accept the application, even though they want to avoid the hassle of forclosing the property, and all the costs associated with it.
Just like Chris and Isa, buyers should expect to present various documents: among others: Proof of funds, bank statements, and personal information like social security, etc
Home sellers on the other hand, should also expect to file several documents requested by the bank. Those include a hardship letter explaining why you can't repay your mortgage. They will have to present documentation, records and tax returns proving of being unable to repay their loan.
Once the application is received, the bank will perform an appraisal on the property to compare market value with the short sale offer. Only then, they will approve or reject the request.
What are the benefits of a Short Sale for a Home Buyer?
If you are a home buyer that is blessed with A LOT of patience, understand that this process might take up to 4-5 months, and that the property might be in need of repair. Purchasing a home in a Short Sale is a great way of getting a DEAL in the home purchase price.
Most sellers want to move along with their lives, and banks don’t want the hassle of having a foreclosure in their hands.
One thing to take into consideration is that the buyer must hire an experienced home inspector to thoroughly examine the property, as sellers may not have the financial resources to keep up with home maintenance and repairs.
Home buyers like Chris and Isa can take good advantage of a short sale. Above all, the mayor benefit of purchasing a Short Sale property is getting the home for a reduced price with minimum competition, as this process is not for everyone.
Jan 2019.. Chris and Isa are still waiting for the bank to give the GREEN LIGHT. With the spring market ahead, they have decided to continue with the process of purchasing the home in Bethel, but keeping their options open with other properties that are coming up for sale.
Recent update, April 2019 we are closing on a condo in Brookfield. They are over excited and happy to start their new chapter in their beautiful home. What a journey we had, together.
The home in Bethel is still up for sale.
