What is a “Short Sale” in Real Estate?

“Where can I get info about a property in DC for a short sale regarding liens, judgments, negative info which a title search would accomplish? And what is a short sale

-Short Sale Loser”

What is a Short Sale?

What is a Short Sale?

Short Sale Loser,

There are a few questions to answer here, and let me answer it quickly; a title search should inform you if there are any liens, judgments, and negative info on the property.

A short sale is when the owner of the property owes more on his mortgage than he can sell the property for. The bank will work with him to sell the property and the bank will take less than the value of the mortgage and the seller walks out without tarnishing his credit rating. When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.

However the owner will usually not get a penny out of the sale. Needless to say the owners aren’t very motivated for a short sale to go through so they aren’t usually very cooperative. The longer they put the sale off the longer they get to live in the house often without making payments. Also since both the non-cooperative owner and the bank have an adversarial relationship will have to agree on the terms, it can take weeks and weeks for an offer to be accepted.

At this point, A Short Sale home hasn’t reached it highest value to a potential buyer. If you’re thinking of buying a short sale you might be better off letting it go into foreclosure then picking it up at a better price without all the headaches of the other two parties that hate each other. That is just my opinion and not something that I am recommending you do.

When buying a Short Sale you’ll most likely follow these steps:

  1. You’ll identify properties with potential for short-sales
  2. You’ll need to view each property
  3. You’ll continue to do your research on your favorites
  4. You’ll identify if your favorites have liens and/or mortgages
  5. You’ll need to figuring out the financing
  6. You’ll contact the lender
  7. You’ll fill out a short sale application from the lender
  8. You’ll put together a proposal for the lender
  9. You’ll have to negotiate with the various parties
  10. You’ll complete the deal

Short sales can be a great opportunity to find your new home at a competitive price. It is important to have a good understanding of the factors that lead to a successful short sale to make it an enjoyable and profitable experience. Hoped this helped, if you need any more answers feel free to Contact Us again

Here is a great collection of articles on short sales by realtor.com: Field Guide to Short Sales

-Walter Grande

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