Short selling occurs because the property loan is greater than the sale price minus all selling expenses. In the case of a short sale, the seller asks the bank to keep an amount less than the amount owed. Having a well-qualified homebuyer is the best way to ensure a quick close on a short sale. Mortgage lenders typically consider only the best and highest offers.
Therefore, a buyer of a short sale home who needs time to obtain a mortgage or meet other conditions may delay the closing process. In addition, if the buyer of a short sale fails to meet the agreed closing date, their mortgage lender can void the sale. How long will the short selling process take? While all short selling is different, you can expect an average short sale to last 4 to 5 months from list to close. However, I approved short sales in 10 days and had short sales that took more than a year to be approved, but most traditional short sales tend to fall within some general deadlines.
Short sales may take longer than normal home sales due to the need for lender approval. It is possible for the buyer to find another property while waiting for their response. If the short sale transaction takes place, check with the Internal Revenue Service (IRS) to see if you will have to pay deficit taxes. A short sale is usually a sign of a struggling homeowner who needs to sell the property before the lender seizes it in foreclosure.
Finding a good agent is key to almost any real estate purchase, but short selling is your own special fish pot. In real estate, a short sale can take place when a homeowner sells a home at a price lower than the outstanding mortgage amount. There may be a good offer for a short sale, but the seller may be six months behind on payments, which will cause the foreclosure process to begin. The impact on your credit is a little different with a short sale, and while both can cause a significant drop in your credit rating, most short sellers recover in just a couple of years, while a foreclosure lasts up to 10 years.
However, buyers and sellers can work with an experienced real estate professional to facilitate the overall short selling process. A former residential real estate agent in the Columbia, South Carolina area and sales manager at a commercial real estate firm, she now uses this experience to help guide readers. As a quick refresher, a short sale is when a homeowner has fallen behind on their mortgage payments and is approaching foreclosure. To sell the house as a short sale, the homeowner begins the process by submitting a package, as required by the bank, which includes information about the owner's finances, information about the home's market value and the particular difficulties faced by the owner that would turn short selling into necessity.
An experienced short selling agent will know how certain banks work, what to anticipate and what is the best way to overcome the bureaucratic process. Before the process can begin, the mortgage lender must approve the decision to enforce a short sale, sometimes referred to as a pre-foreclosure sale. It can take weeks or months for a lender to approve a short sale, and many buyers who submit an offer end up canceling because the process takes too long. Short selling documentation includes most of the information they need for a loan, so you may be able to get quick approval from the current lender.
The best way to expedite the approval of a short sale, and therefore your security deposit, is to ensure that the seller's real estate agent has experience in short selling. While a foreclosure basically allows you to leave your home, albeit with serious consequences for your financial future, such as having to file for bankruptcy and destroying your credit, completing a short sale is labor intensive. During the short selling process, some banks take weeks to respond to offers, while others never respond. .