Short sales (when the market value of a property is worth less than the mortgage amount) can offer a homeowner in financial distress a viable exit alternative, however there are a few things to know beforehand.
Selling real estate can be an arduous task under the best circumstances. However, offering a property as a short sale can add a greater level of difficulty that many are not prepared to face. Here are some factors to take into consideration as it pertains to short sales:
It can take a great deal of time to close on a short sale, so patience is required. The reason for the delay in closing is because this type of sale requires the bank to sell the property for less than the amount owed. As such, the buyer and seller must get approval from the financial institution in order to close on the property. Be prepared for a long waiting period before closing on a short sale property.
Hire a Competent Real Estate Agent
Selling short sale property can be complicated and as such hiring an agent that has experience in this field is a necessity. Short sales involve a great deal of paperwork and perseverance. It must be done correctly from the very beginning to ensure success. Make sure the agent has experience with short sales. Some agents will lead you to believe they do when they have not actually done any themselves!
Price the Home Correctly
When attempting to short sale a property the price must be carefully considered. It must be close enough to market value to ensure bank approval while also offering some type of discount to buyers. For this reason, setting a price can be difficult and intimate knowledge of the overall housing market is necessary.
Speak With Your Lender
Have a dialogue with your lender before starting a short sale process. All lenders are different, and while some lenders may accept a homeowner as a short sale candidate, others may not. Make sure you understand, and if necessary, complete any pre requisite approvals your lender may require. You don’t want to go down the short sale process only to find out at the end that your lender will not approve your transaction.