WHAT IS A SHORT SALE ???
A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In a short sale, the bank or mortage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.
Short Sales are a part of today's market nationally and it is unfortunately a part of our local market here in Seattle. I have had some experience dealing with Short Sales and it is no easy task getting them closed. I thought I would write a few points about them and hopefully it will be of use for you in your next purchase. It may be worth your while to take a look at short sales - there may be some tremendous opportunities for you!!!
1. Have patience. It takes at least 20% longer as there is a bank negotiator who requires more detailed appraisals and sometimes underlying title issues appear.
2. Avoid properties that have a 1st and a 2nd that are different lenders. This is really difficult because you have to get the 2nd to accept a really low amount in order to release their position.
3. Have a good Escrow representative involved. This is really important as the escrow company must be in communication with the bank and negotiator.
4. Make sure that you have an experienced and trustworthy agent. It is A LOT more work for the agent and so let them go to work for you!
Summary: We will be dealing with Short Sales for some time. My belief is they will be a significant part of our Real Estate Market for the next 12-15 months and as the market heals the number of Short Sales will evaporate. If you would like more information and details, please feel free to call me @ 206-799-2891 or e-mail me at firstname.lastname@example.org. Have a great week.