As you would expect, there are lots of buyers looking for great deals in the
I’On Real Estate market. And, why not? Lots of sellers really need to get out and they are offering many concessions to get their homes sold.
Short Sales Are Very Attractive to Buyers
One of the most sought after buyer “deals” in today’s I’On real estate market is the short sale. Simply put, a short sale is a transaction in which the seller’s mortgage lender agrees to accept less than the balance due on the loan at closing.
How Does the Short Sale Help Buyers, Sellers and Lenders?
In a perfect scenario, a short sale can be advantageous to all parties involved:
- For the buyer, it’s a possible opportunity to purchase a home at a deep discount to the market
- For the seller, it’s a much better alternative than a foreclosure. There is less impact on the seller’s credit and it also provides a way for the seller to salvage some dignity and avoid the public embarrassment that a foreclosure can sometimes bring.
- For the mortgage lender, a short sale can be a less costly solution than foreclosure, particularly in a market with declining prices
The Short Sale Approval Process Can Be Very Time Consuming!
If you are considering buying a short sale property, it’s important to know that getting bank approval is a very painstaking and time consuming process. It requires a substantial amount of paperwork form the seller, including very complete documentation of the hardship that the mortgage payment is causing the seller. There are many things that can complicate the approval process:
- Lack of sufficient documentation from the seller and seller’s REALTOR
- The lender has an overworked and understaffed loss mitigation department which can bring the process to a “crawl”.
- A second mortgage (or equity line of credit) from a different lender – in this case, both lenders have to be satisfied with the final payoff. This can be very difficult
- Impatience on the part of the buyer – many buyers just get tired of waiting for approval and move on!
As the number of short sales increase, it is becoming more difficult for the lenders to process all of the requests in a timely fashion. Some are better equipped to handle the load than others. One bank recently told me that it could take up to 90 days to get an approval. I’m aware of another situation where a Mt. Pleasant buyer has been waiting 7 months for an approval from two lenders!
Patience With the Short Sale Process Can Be Very Beneficial to All Parties
While these are extreme cases, these are becoming more common as more sellers look for ways to get relief and avoid foreclosure. The message is clear – A high degree of patience is required on the part of all parties in order to achieve a positive outcome. However, as challenging as the process is, it can be a great solution for all parties involved.
If you are a buyer or a seller and would like more information on the short sale process, please contact me.
Keller Williams Realty