Custom Search





Home
Site Map: START HERE
Rental Property Intro
Investment Strategy
Property Values 101
Find a Property
Financing Property
Cash Flow Analysis
Landlord 101
FREE Landlord Forms
Landlord Insurance
Tenant/Property Law
Rental Property Tax
Foreclosure Property
Commercial Property
Retirement Savings
Sell Property
Property Definitions
Rental Property Blog
Property News
Real Estate Videos
About

Follow Me!
Bookmark and Share

"What is a Short Sale? Here is an Overview of the Short Sale Process"


Show Your Love


Whether you're a first time home buyer, an investor, or looking for a way to move up to a better home in a better neighborhood, buying a short sale may be a great opportunity. And knowing something about the short sale process may help you to take advantage of that opportunity.

That is the message Bryon Ellington introduces in this latest shared video. If you've already begun your search for a new home, or even if you have experience investing in properties, you may or may not be aware of the advantages that buying a short sale can provide.


WHAT IS A SHORT SALE?


What is a short sale? A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts owed against the property.

This comes into play when the property owner cannot afford to repay the full amount owed...in this scenario, the lien holder may agree to release the lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency.

In this brief presentation, Bryon begins by highlighting three key differences between the short sale process and a traditional transaction.

  • The first difference in buying a short sale is that you will have a lower average sales price.
  • The second difference in the short sale process is that it generally takes longer to close.
  • And the third primary difference is that the short sale of a property may very well involve more than just the seller's lender (For example: additional mortgage investors, second & third lien holders, and possibly one or more attorneys)

Bryon then goes on to detail a recent study showing that properties sold via short sale can take up to 62 days for the lender to respond to a buyer's offer. That same study also shows that once the lender accepts an offer, it can still take as much as an additional 67 days to close.





TIMELINE OF A SHORT SALE


To further illustrate his point, Bryon shares with us a timeline that was based on one of the short sales from the study.

  • Day 1: The owner of a house misses a mortgage payment - or realizes that the house is worth less than what he owes the lender.
  • Day 7: The owner talks to a real estate agent. The agent prequalifies the home for a short sale.
  • Day 13: The owner signs a listing agreement with the agent.
  • Day 25: The agent submits the short sale documents to the lender.
  • Day 35: The lender creates a short sale file.
  • Day 50: The lender assigns the property to an independent appraiser or agent for an estimate of property value. Also known as a broker's price opinion (BPO)
  • Day 65: The lender reviews the results of the appraisal.
  • Day 90: The agent receives a letter of sale approval for the house from the vendor.
  • Day 110: The short sale transaction is closed and the property is sold.

After demonstrating with this timeline just how long the short sale process can take, Bryon goes on to stress that no timeline is standard for buying a short sale, and even says, "your short sale timeline will almost certainly vary from this example."

In closing, Bryon reminds us of the most important point to remember, which he mentions in the beginning. The point being that while the short sale process can require a lot of patience, the opportunity and payoff can be big.

I hope this video helps answer the question, "what is a short sale?," while aso providing some insight into the pros and cons of the overall short sale process.



4 Responses to What is a Short Sale? Here is an Overview of the Short Sale Process

  1. sos says:

    Help! I have an opportunity to acquire a nice short sale property but I don’t really understand the degree to which it’s possible to negotiate the purchase price? Any idea how the negotiations are supposed to work throhgh the short sale process?

  2. johnas says:

    @sos: I felt compelled to reply. Generally speaking, you won’t have a lot of room to negotiate on a short sale property. Most times the lending bank calls the shots here. Of course, things like the length of time the property has been on the market, the area, and the bank’s policies will impact this, but my experience with short sales is that you have to look for preexisting bargains; you’ll have a hard time trying to negotiate your own bargain wit the banks.

  3. Moe Tavern says:

    Good, informative post on the short sale process. Thanks for the video also. Keep up the good work!

  4. Cass says:

    I had a bad experience with the short sale process a few years ago. Basically the lender pulled out from my offer at the 11th hour, I believe because they got a better offer at the last minute. I think that working with someone on your side with a lot of experience in short sales is probably the most important success factor.

Leave a Reply

Your email address will not be published. Required fields are marked *

Name *
Email *
Website
Comment

footer for rental property investing page