Important terms to know:
A property being sold at a price lower than what the seller owes on the mortgage. The lender reviews and approves the purchase bid, which often occurs when the seller is under financial distress and is unable to continue paying the mortgage loan. In the case of a short sale, the seller opts to sell the property to a third party and use the proceeds to pay the lender.
How do short sale properties work?
Short sale properties are similar to traditional property purchases but can take longer to finalize due to the lender approvals involved.
Confused? Here’s an easy way to think about it.
A homeowner decides to sell their property and has negotiated a price point with their lending institution. The negotiated price is less than what is owed on their mortgage. The house goes to market and the highest bidder prevails.
Then, the purchase price and anticipated closing costs are added to a closing statement, which is then presented to the lending institution.
The lender then determines whether this purchase price and projected net proceeds are approved to proceed with the short sale. If the lender is satisfied by the terms of the offer, the short sale goes through and the purchaser assumes ownership of the property.
While short sales do take a little longer to finalize, the properties have some great benefits for buyers, like a guaranteed clear title, the opportunity to visit the property before an auction event, and the ability to finance the purchase. Even better, the closing costs for short sales are usually split between the buyer and seller—which means less money out of pocket!
Quick info on short sale properties
|Financing or cash-only:||Both|
|Inspection or sight unseen:||Inspection|
|Property types:||Residential (single family, multi family, modular, mobile), commercial|
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