A Short Sale is Similar to a Normal Contract with One Major Exception – It Needs Approval
A short sale is a real estate transaction where the proceeds from the sale do not generate enough money for the seller to pay off their mortgage completely. Because the lender takes a loss on the transaction, they must approve the sale beforehand.
Finding a short sale that fits the buyer’s needs can start with a review of websites like http://www.foreclosurelistings.com/list/FL/MIAMI-DADE/SHORT-SALE/ that offer lists of Short Sales by county, city and zip code.
There are several participants to the transaction that must agree before the sale can be completed.
* The mortgage lender is usually two different parties; the servicer (who accepts payments), and the owner, sometimes called the investor. The servicer is usually the party that does all of the short sale processing and presents their findings to the investor.
* If there is mortgage insurance on the property, the mortgage insurer may also have to approve the transaction.
The reason the mortgage lender must approve the transaction is that a lien must be released before the title of the property can be transferred to the new buyer. The same is true for the second mortgage lender if there is one.
Because the analysis is so time consuming, the servicer will generally approve a short sale only after there is a contract to sell the home. The approval process includes several steps, including an appraisal of the property, and usually takes three months or more.
Furthermore, because the underlying contract is between the seller and the buyer, and the banks simply approve the transaction, it is possible to negotiate subsidies for closing and any repairs that need to be made. This is different from a foreclosure where the bank will insist on an “as-is” contract because they are not easily able to perform any refurbishment.
The buyer should include a home inspection as a part of the contract. The buyer may or may not have the right to ask the seller to make repairs to the property, or the seller’s mortgage lender may insist on an “as-is” sale where no repairs are allowed. The buyer should conduct an inspection with the condition that the buyer can withdraw from the contract if some large problem is identified.
Once the contract is approved, all of the other normal parts of a house purchase, including appraisal and final underwriting, will take place. That should take less than a month and in some instances the seller’s mortgage lender will provide an approval that is only good for a limited time. Closing must take place within that window.
Short Sale Homes That Fits the Buyer’s Needs:
West Palm Beach, Palm Beach County
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