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Short sales...

February 1, 2011

Short Sale Defined - A sale in which the proceeds from the sale are insufficient to pay off the loan secured by the property being sold. To be successful, the lender must agree to release it's lien against the property even though it's loan is not being paid in full.

What Buyers Should Know About Short Sales - Less than half of accepted short sale contracts result in a sale of the property. Additionally, short sales are very stressful on all parties. To be successful requires that all parties be mentally prepared to deal with the repeated requests for updated information, changing bank positions, lack of lender response and etc. associated with short sales. Buyers also need to be financially and legally prepared for the uncertianties of the short sale. Can't handle stress? Then forget about a short sale. Can't afford to risk spending money on an appraisal and home inspection on a home that may never close escrow? Then forget about a short sale. Have to be moved by a certain date? Then forget about a short sale.

Most knowledgeable buyers who understand this process are not willing to spend their time with short sales. This leaves mostly bargain hunters to play the short sale game. Given this, it is not surprising that most short sale listings do not result in a sale of the property.

There may be some language that you can include with your offer to improve your odds of success, but even then you are going to find yourself swimming upstream.

A better option is to wait for the property to be foreclosed on. You will find that dealing with the lender as a seller is faster and less stressful than trying to deal with them in a short sale.

What Sellers Should Know About Short Sales - In addition to what is written above, sellers considering a short sale should understand that;

1. According to an attorney familiar with the short sale process, a short sale only saves about 10 points on your credit score as compared to a foreclosure.

2. Short sales are not easy to get approved.

3. They are normally very slow.

4. Short sales and foreclosures may have tax consequences. Talk to your accountant before deciding how to proceed.

5. Talk to your lender to see if there is any way to restructure your loan to avoid a short sale, foreclosure or deed in lieu of foreclosure. History shows that when prices turn around, the median home price will likely double or triple from their low point in the housing recession.

6. If all else fails, a deed in lieu of foreclosure may be faster and less stressful than a short sale or foreclosure though they will not work in every situation.


What Clients Are Saying

quotes"I have nothing but great things to say about Lloyd and his wife, Tracy. They sold my home in four days and helped us get the home that we wanted. He followed up on all details above and beyond anything I expected. He has my highest recommendation.
- John


Lloyd Leighton Realtors

Address: 1212 Highland Avenue
Yuba City, CA 95991-6115

Phone: (530) 671-6152
Fax: (530) 671-3904

Cal BRE Lic. #00951505