Short Sales 101

As the housing market creeps into the last quarter of 2009, a clear pattern has emerged; can anybody say “Short Sales”?  The newest trend in the market place is quickly emerging as the leader in home sales.  “Short Sales” can be defined as: Your current bank accepting less for the property sale, than is owed on the mortgage.

Let’s explore this new world of “Short Sales” and what the benefits can be in this widespread alternative.

For the troubled Seller, it is simple:

• The foreclosure is postponed while the short sale contract is negotiated.
• The Seller will be able to repurchase a home 1 year earlier than in a foreclosure, for example they can repurchase a home in 3 years versus the standard 4 year wait.
• In some transactions, the Seller may not be responsible for some or all of the loss that the bank incurs for their invest properties.  Most principle residences close with no financial penalty.

For the Buyer, the following may apply:

• The buyer may be able to purchase a home below current market value.
• The home itself may not have been vacant for an expanded period of time.  There fore there is a chance for limited damage to property that has been known to occur on a bank owned property.
• Closing costs and some minor repairs can be negotiated into the contract, depends on the bank/investor holding the loan.

For the Real Estate Agent:

• There are higher commissions than most bank owned listings.

• You also have a highly motivated seller.
• The listing will be priced for a quick sale.     

As with any real estate sales there are some down sides.  Contracts take several months to negotiate and some of the banks refuse to approve some of the “Short Sales”.  Sellers may be asked to sign a personal note on a small percentage of the approvals.  These options are considerably better than just letting the home go to a foreclosure sale. 

In good, bad and flat real estate markets a certain percentage of homes must be sold.  Sellers and Real Estate Agents must adapt to these changing market conditions to sell properties.  Staying tuned to the market will help you bend with the trend.

Don DiFiore   Broker/Owner

RLO Realty   303-888-8493   This e-mail address is being protected from spambots. You need JavaScript enabled to view it