Short Sales: What Are They, Who Is Eligible, and Why Pursue One?
A short sale occurs when a bank agrees to accept an offer on a home that is less than the remaining balance on its mortgage. As an option that can be utilized in the event of demonstrable financial hardship, short sales can be an excellent alternative to foreclosure. They allow homeowners to avoid some of the damage a foreclosure would do to their credit report and avoid taking financial responsibility when they owe more than their home is worth. Banks will consider a short sale because it allows them to recoup some of their investment without the work of selling the home themselves.
Tips for Success on Short Sales
including tax returns and bank statements, will be needed. Incomplete information is one of the most common reasons a short sale is rejected.
Price a home competitively,
if not aggressively, and have a plan for price reductions.
Market the home.
A listing on the Multiple Listing Service (MLS) is not enough.
Secure a valid contract.
The buyer must be prequalified for financing, submit a short sale disclosure and understand that a short sale is not the usual real estate transaction.
Communication is essential.
The Realtor® must keep the buyer's agent, as well as the owner, up to date on the progress being made on the sale.
with a real estate attorney and an accountant when negotiating a short sale.
Don't wait until the lender is about to foreclose.
Allow enough time to put the home on the market, find a buyer and close.