Short Sales

Recently I wrote a post about foreclosures . Making an offer on a property that is lender owned can be a frustrating experience. You would think with all that you hear in the news, banks would quickly respond to an offer. I recently made on offer on a foreclosed property and it took six weeks to receive an answer. Yes, six weeks.

Some listings will state that the sale is subject to the approval of the lender. In other words, it is a short sale. A short sale is when prior to a house being forclosured, a lender agrees to accept less than the outstanding balance owing on the mortgage or note. The seller then in turn sells the property and the lender receives all the proceeds of the sale.

The benefit to the lender is that they do not have to reprocess the property through lengthy and costly court proceedings and then have to remarket the property.The benefit to the home owner is that they avoid having the foreclosure on their credit report. A balance may remain after the property is sold that the borrower is still owed. Sometimes, this deficiency can be forgiven.

Negotiating a short sale is even more difficult to do than simply offering on an existing repossessed home. I take my short sale questions to Joel Zieve from Great Lakes Home Solutions, a firm successfully specializing in short sale work. He lists seven misconceptions or mistakes people often make.

One mistake I see people make over and over again in real estate is that they do not do research their decision. In short, they do not do their homework. Whether you are buying, selling, refinancing, or worse yet, finding yourself facing a tough decision on a property you can no longer afford, always be sure to get all the facts, consult the experts; your attorney, your realtor, your lender and the short sale specialists.