If you’re only beginning to get your feet wet in the real estate industry, be sure to cover all kinds of material–such as “short sales.” In this day and age of a slumping economy, particularly when it comes to real estate, keeping a close eye on “short sales” and remembering to inform your clients of the ramifications of such a sale is important. Because the fact is a “short sale” can go either way–good or bad. And your clients need to be aware of that.
A “short sale” is a sale that a lender accepts for less than the actual total amount due. It results from a homeowner’s inability to pay up the mortgage before selling and must move out of the house; therefore, the lender is almost forced to take less money than the house is worth. While that might be good for a prospective home buyer on the market, there are disadvantages:
Time to approve the home loan might take much longer than other loans, for one thing. Moreover, even if you get approved for the short sale at the offer made, there could be extra costs down the road for things like damages, defects, and other variable costs. It’s an open ballgame when it comes to short sales, and you should be aware of them as well as your clients.
On the flip side, if you’re a homeowner trying to negotiate a short sale with your lender, there a few hoops you need to jump through as well–such as a written statement, proof of your income, copies of your bank statements, constant calls to keep them updated, a comparative market analysis of homes in the area. The list goes on and on. It could be said that a homeowner’s chances of getting a short sale approved are slimmer than a home buyer’s chance of benefiting from a short sale.
But that’s the state of the industry currently. And as a real estate agent, prospective home buyer, or struggling homeowner, you need to be aware of the situation.