The benefits and the realities
This buy-and-sell option has become the solution for many people who need to get out of debt on a home loan.
The “short sale” consists of the sale of a property for less than
that is owed on the mortgage, since the seller wants to get out of debt due to financial problems.
If you are looking to buy a property as a residence and maximize your money taking advantage of the low market prices, the “short sale” may be a good option.
This buy and sell option has become the solution for many people who need to get out of debt on a mortgage loan, due to economic situations that force them to sell their properties and as an alternative to foreclosure. In addition, it becomes a great benefit for the buyer, since he can get an excellent residence for a lower price.
What is it about?
The so-called “short sale” consists of selling a property for less than what is owed on the mortgage, since the seller wants to get out of debt due to financial problems. The creditor bank (who owns the seller’s mortgage), could assume the loss if the property is sold at a value that is not sufficient to pay the debt that guarantees the property.
This transaction is carried out through a new financing bank that will loan the buyer the money to acquire the property. It is important to know that the process of determining whether the creditor bank accepts the short sale is generally handled by the Loss Mitigation unit with the owner of the property for sale. Meanwhile, the financing of the new purchase is handled by the buyer with the Mortgage Banking Department of the new bank he has chosen.
What should the buyer expect from a short sale?
If you choose this option to acquire a residence, you should know that the process will take more time than a traditional purchase, since in this type of bank transaction several institutions intervene that must work together to achieve the sale. A conservative estimate to complete the process from the application to the end of the sale and purchase agreement is between 60 and 90 days, so keep calm.
Which are the steps to follow?
The buyer must go through a prequalification process to verify the possibility of carrying out the business. Then the seller and the buyer determine the price of the property to continue with the procedure of requesting the bank to approve the “short sale” through its “Loss Mitigation” program.
Once the bank (of the seller) accepts the short sale, it must issue a certification of approval and the buyer can proceed to originate their case with the new bank. The next step is for the buyer to go through the normal qualification process of the bank of their choice for financing and if approved, they proceed to closing.
The “short sale” is a transaction that can be very attractive to the buyer who wants to maximize his investment. However, it is important that you understand that the seller has to first obtain the approval of the creditor bank, to continue the sales process, which may take time, but the result will be the purchase you wanted so much for the ideal price.