Making sense of the story
- Typically with a short sale,
the homeowner is underwater and has experienced a financial hardship such
as a job loss. To limit the damage to his credit rating, a homeowner
may attempt to work with his lender to negotiate a short sale. Not
only must the bank approve of the short sale itself, it also must agree to
the price, since the bank will accept the difference as a loss.
- Unlike foreclosures, in
which the owner has walked away and the bank is looking to unload a vacant
– and sometimes vandalized – property, a short sale isn’t a distressed
home that will sell at an extremely low price. According to data
from RealtyTrac, short sales typically sold for nearly 10 percent less
than the market price in the first quarter of 2011, whereas foreclosures
sold at an average discount of 35 percent.
- Home buyers wanting to
purchase a short sale must have patience. In most cases, when a
buyer makes an offer on a house, he receives a response from the seller
within a few days, or even hours. With a short sale, the bank must
approve of the sale and bank representatives are overloaded with
cases. It may take 30 days or longer for a buyer to receive a
response from the bank.
- In a traditional real estate
transaction, it is common for a home buyer who currently owns his home to
make his offer contingent on selling his current home. In short
sales, most banks will not approve an offer that is contingent on the
buyer selling his current home, as too many things can go wrong.
- Banks also typically won’t consider short-sale
offers that have inspection contingencies in them, so buyers can either do
an inspection prior to making an offer or forego an inspection altogether.
- Even with the challenges associated with short
sales, buyers should not avoid these transactions. Being prepared
ahead of the time and working with an experienced REALTOR® can help buyers
avoid frustration and surprises down the line.
Reprinted from C.A.R. Market Matters
Thank you for reading this post. If I can ever be of help in finding you the perfect property here in the Napa Valley, please email me at Curtis@NapaValleyAddress.com.
Your Broker Extraordinaire, selling Napa Valley Real Estate from its heart, Yountville