Short Sales: What they are and what you need to know.

Let’s face it, no one particularly wants to do a short sale, but if you have to… it’s good to know what they are, what the process is if you’re in a Short Sale, and what you should know if you’re considering a Short Sale.

Simply explained, a Short Sale occurs when a home seller wants to sell their home but owes more on their mortgage or mortgages than the current market value of the property. The seller must get their bank’s approval to sell the property for less than what is owed on the mortgage.

If a homeowner has exhausted other options to stay in their home such as loan modification or refinance, a short sale is a good alternative to foreclosure. In most Short Sales the seller is given deficiency waiver or full release of their responsibility to pay the remaining balance. In some cases sellers are also given relocation money to assist their move. Most banks recognize that short sales minimize their losses and encourage sellers to pursue Short Sales.

One important part of a Short Sale that Sellers should consider is the impact to their credit rating, especially impacted by late payments. Short Sales are much more “friendly” on your credit too than going through a foreclosure. Most sellers who do a Short Sale will have to wait a minimum of 3 years before being able to purchase again.

So now your home is approved to be sold as a Short Sale…what is the selling process?

The Short Sale process can vary by bank and by loan type. Sellers should contact a REALTOR who specializes in Short Sales to discuss their individual situation.  For most Short Sales, the seller will list the property for sale and obtain an offer. Once the offer is received it is sent along with the seller’s financial documents to the bank. The bank then reviews the seller and the net proceeds provided by the offer for Short Sale approval. This process can take anywhere from 60-120 depending on the bank. Most banks will look for the seller to have a financial hardship or some reason they can no longer make the payment.

If you’re thinking about doing a Short Sale, or purchasing one, call an experienced Dickson agent. Our agents at Dickson have the training and expertise to make your transaction as smooth and problem free as possible.