What exactly is a short sale?
A short sale occurs when someone owes more on their mortgage than the sale of the property would net. As long as a lender approves the short sale, in lieu of foreclosure, the seller can list the property short of the amount it would take to pay off the loan.
The two kinds of short sales are those with recourse and those without. If there is recourse, the lender will agree to the short sale, but will collect the difference over a period of time. This is not the ideal option.
The best kind of short sale is one wherein the lender has agreed to accept a certain amount of money up front. Let’s say you owe $180,000 on your home but the sale of your property is only going to net $155,000. In a short sale without recourse, the lender will accept the $155,000 under the condition that the seller receives nothing.
From the buyer’s perspective, short sale properties can sometimes be a very good deal. However, the process of purchasing a short sale can take a long time. It can take between six to 12 months, or even longer.
Short sales are particularly good if you are buying the property as an investment.
But whether you are purchasing a short sale property or listing one, make sure you are working with an agent who has experience with this kind of transaction.
If you have any other questions or would like more information, feel free to give me a call or send me an email. I look forward to hearing from you soon.