Wednesday, November 9, 2011

What a Short Sale Means to You

ShortSale wide What a Short Sale Means to You

by Jackie Scura, Guest Writer

Short Sale” is a real estate term that I am sure you have heard a lot these days. If you have no idea what that means or if you are wondering how a short sale is different from a foreclosure or even a regular home sale, keep reading. Beyond the actual definition, it is important for you to know what a short sale means for you as a buyer or a seller.

A short sale occurs when a bank agrees to allow the homeowner to sell the home for less than the original loan’s value. The “short” in a short sale is the difference between the amount owed and the amount repaid to the mortgage company after the home’s sale. This is a possible option for homeowners who may owe more for a home than it is currently worth. You will see these mortgages called “underwater” or “upside down.”

For a seller, getting a bank to agree to a short sale can be a financial lifeline. Homeowners who have lost their jobs and are unable to sell their homes are prime candidates for this option. Monthly payments will not change to reflect the home’s current market value and selling the home in order to reduce expenses is nearly impossible if the price has to be based on peak prices. Short Sales create more homes for a buyer to choose from that are priced for today’s market. For some, this option is the best way to prevent bankruptcy and foreclosure.

On the downside, banks won’t always agree to a short sale, and the homeowner is often expected to make up some or all of the price difference to the bank after selling. If you do fall in love with a short sale home, you will need to be patient. Every short sale has the extra step of bank approval, which can add months to the whole process (depending on the number of loans and liens against the property).

Make sure you work with a REALTOR® and real estate attorney who are knowledgeable about the short sale process. They will be able to advise you on any potential problems, delays, and opportunities. Also speak with your mortgage advisor to be sure this is the right option for you. Remember, buying a short sale home may not be for everyone, but if it is for you, take advantage.

–Jackie Scura is known as the No.1 RE/MAX agent in New Jersey and No. 19 in the country. She also received the Diamond Club Award last year and has also been featured on the cover of Broker-Agent Magazine.

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