In its simplest form a Short Sale is when the bank accepts an offer on a home that is less than what is owed on the mortgage. Consider that a homeowner may owe $150,000 on their Spring Hill home but that the market value is only $100,000. If the bank accepts that offer then they are basically “short” $50,000. The lender may decide to take this offer for less than what is owed and also forgive the homeowner the debt in the process allowing the homeowner to move on.
Banks may decide to accept a short sale for any number of reasons but ultimately it is mostly because it is better for the banks bottom line and they will end up with higher proceeds in doing so. To foreclose on the property can be a lengthy and expensive process costing anywhere from $10,000 and up and taking up to two years or more.
A short sale will get the bank their money in a more timely manner and avoid them having to go through the expensive foreclosure process. Not only that but it prevents the bank from “owning” another home. Banks are not in the home owning business, they are in the lending business.
A short sale is by no means a straight forward process and it is important that you have a professional to help you along the way. You may have other options open to you.
You probably have some questions about the process such as:
- What is the difference between a short sale and a foreclosure and are there benefits of a short sale versus a foreclosure?
- Is a short sale right for me? Do I qualify for a short sale?
- What is the short sale process, and how long does it take?
- Can my lender come after me for a deficiency? Will I have to pay anything at closing?
- Will there be tax consequences for my short sale?
HOW LONG DO SHORT SALES TAKE?
There is no definitive answer for how long a short sale will take but there are changes being made in order to try and speed up the whole process. Watch the video below to see our COO Ross Hardy talk on Fox News about Bank of America’s pledge to respond to short sale offers in 20 days. Also, Fannie Mae and Freddie Mac have undertaken to respond to offers on homes that they service loans for in just 30 days. Click here to read the latest on these changes.
If you want to know the difference between a short sale and a foreclosure, as well as how a short sale can be much more beneficial for a seller then please fill out the form below and we will email you the information.