A Short Sale is another type of listing. Short Sale List Agreement
Noted over the MLS as subject to bank approval, or subject to 3rd party approval.
Is a Short Sales Boom Coming?
Banks are ramping up short sales thanks to government incentives and the realization that short sales result in lower losses than foreclosures. On average, banks lose 50 percent on a foreclosure, but only 30 percent on a short sale.
Bank of America, the nation’s largest mortgage servicer, has dramatically reduced the time it takes to process short sales. Elizabeth Weintraub, a Sacramento, Calif.-based real estate practitioner who handles many short sales, said, "Bank of America approved [a short sale] in 24 days. That flipped me out."
The hang-up for many short sellers has been second liens, but the new government program gives first lien holders incentives to share and offers second lien holders and investors a $6,000 cash incentive.
Under the new program lenders must tell the seller the minimum they’ll accept. When the seller comes back with a good offer, it must be accepted within 10 days.
Chris Saitta, CEO of Equator, which produces short-sale software, predicts a boom in short sales. “The challenge will be handling all the volume,” he said.
Source: CNNMoney, Les Christie (03/29/2010)
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan/s. This situation is now prevalent in the current market, due to inflated Real Estate valuations and the open credit markets during the recent periods.
If you purchased your home in the past 3 or 4 years or took out a 2nd mortgage or home equity line of credit, you may fall into this dilema.
If you are finding you cannot pay the mortgage loan on your property, the lender may decide that selling your property at a moderate loss is better than pressing you for mortgage payments.
Both parties must consent to the short sale process, it allows both of you to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for you.
If you are looking to purchase this type of listing. Get started now; The process generally takes longer than a conventional purchase.
Contact Principal Broker for Assistance Foreclosure Property: Once a property has been foreclosed on by the bank. The process is much quicker. The Listing is then classified as an "REO" or Bank Owned. Generally these properties are a good value. All potential profit or positive equity has been removed from the price.
Banks are backlogged with short sale requests, to be taken seriously the Items below will make for a more efficient Short Sale. Communication is key.
- Have you requested and received the short sale package from the bank, including the hardship letter?
- Have you sent the package AND have you confirmed receipt?
- What communications, if any, have you had with the bank?
- Has the bank approved the list price?
- Have you received any other offers that you are waiting to hear back from the bank on?
- Does the loan have PMI on it? (Private mortgage insurance)
- Is there one or two trusts? Any other liens?
- What are the names of the banks? Are these FHA or VA loans?
- How long do you estimate that the lender will take to provide an answer to an offer?
- Have you, the seller, completely stopped making payments on your loan.
Contact me and I can give you additional information related to marketing your property or purchasing a Short Sale listing.
