FAQ: What is a short sale?
Posted by: raindrop 6 years, 10 months ago
In real estate, a short sale is a real estate transaction where the sales price is less than the liens against the property plus the closing costs. A short sale requires bank approval and is not guaranteed.
Sellers seeking a short sale must provide the bank's requested documentation to prove a financial hardship. Oftentimes banks look to see if the Sellers are imminently facing foreclosure.
Banks review the requested documentation and insert the information into their programs to determine whether the borrower is eligable for either a short sale or a loan modification. If the bank agrees to a short sale, the Seller then has 10 days after bank approval to see the advice of a financial planner, tax attorney, and credit counselor to discuss the negative effects on a Seller after a short sale.
Every bank works differently, and every bank has different requirements. The time frames for bank approval of a short sale have reduced dramatically in recent months, and are sometimes even approved within 30 days!
Once the bank approves a short sale, the escrow period starts and the Seller is still required to provide all of the disclosures that they would provide in a traditional sale. Further, at this point, the Buyer starts their investigation of the property through their home inspection and any other due diligence they deem necessary.
If the bank does not approve the short sale, the buyer can either choose to increase their offer, or walk away from the transaction.
If the value of a property has depreciated and a Seller wants to sell their home without the negative effects of a short sale, they are able to do this by contributing the difference between the total liens plus closing costs and the sales price to escrow.
Whether you are a Buyer interested in purchasing a short sale or a Seller seeking a short sale, contact Kate for any questions you have about the process and she will explain how Coronado Island Realty can help.Share on Twitter Share on Facebook
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