What is a short sale? What are the advantages, if any, for a home buyer? First of all, let’s consider how a short sale is defined here in Raleigh, NC.
A short sale indicates a real estate sale where there is more debt owed on the property than the property is worth. The home seller thus needs the lender(s) to accept a payment that is less than the amount that is owed. There may be other parties that have to approve the home sale as well. These include other lien holders, those who insured the loans (like PMI), bankruptcy trustees, and taxing authorities.
It appears that we will have these types of transactions for some time to come. Here’s but one prediction: Travis Waller, a certified residential specialist at RE/MAX Advantage Plus in Teaneck, N.J., expects negative equity to trigger a second wave of foreclosures “that no one is even speaking about.” (Short-sale market has legs, Inman News Thursday, January 13, 2011)
According to the North Carolina Association of REALTORS® standard form 104 that is used along with the offer to purchase a short sale is where:
· The purchase price is or may be insufficient to enable Seller to pay the costs of sale, which include but are not limited to the Seller’s closing costs and payment in full of all loans or debts secured by deeds of trust on the property due and owing to one or more lender(s) and/or other lienholders
· Seller does not have sufficient liquid assets to pay any deficiencies and
· The Lienholders agree to release or discharge their liens upon payment of an amount less than the amount owed, with or without the Seller being released from any further liability.
The obvious advantage to a home buyer in regards to the purchase of a short sale is the possibility of getting a significantly reduced price and this does happen. However, a short sale is anything but short when it comes to the amount of time it takes – sometimes as much as a year to close one of these types of home sales. There is a larger amount of paperwork and the response times for many lenders can be long.
So, if you are considering a short sale purchase, you will want to have a professional real estate agent assist you in the transaction. Contact the Marti Hampton team if you would like more information.