What is a short sale and why is it bad?
What is a short sale and why is it bad?
Short sales are a mixed bag for the buyer, the seller and the lender. If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. You’ll also walk away from your home without a penny from the deal, making it difficult for you to find another place to live.
Can you walk away from a short sale?
Short sale response times vary between a minimum of 30 days to several months and even a year in some states. A buyer can walk away from the transaction if the lender fails to respond or approve his offer within the time period specified in a short sale addendum.
Who has the final say when we have a short sale?
As explained above, in a short sale, the seller does not have the final say over whether or not to accept an offer. Instead, it must be accepted by the seller and then go to the bank, where several other levels of approval are often required.
How long does a short sale last?
A conservative estimate should allow for six months, start-to-finish, on a short sale. While it’s technically possible to complete in as little as two months, it’s unlikely. As we’ve reiterated, your patience will be one of the most crucial aspects of your short sale timeline. Well, that and a great agent, of course!
How long does it take a short sale to close?
A short sale can take up to six months to be approved because many factors can slow the process down. You might be able to reduce the time it takes to be approved by asking your agent for some information before making an offer.
Is it better to buy a short sale or foreclosure?
Buying a foreclosure typically is faster than buying a short sale, and an investor can buy a home for rock-bottom dollar. The national average of a foreclosure that needs some work may cost around $107,600, according to Re/Max. The investor could rent out the home or resell it after fixing it up.
What is a short sale and how does it work?
When you purchase a house through a normal sale, there are just three main players: you, the seller, and your lender. A short sale, however, throws another party into the mix to gum things up—the seller’s bank, who is now trying to recover as much of their money as possible.
What happens when you sign papers for a short sale?
Once the bank approves a short sale — and you and the bank sign papers to this effect — the home goes on the market. The home could sell quickly, or it could take months, so be prepared to continuously show the property. As soon as escrow closes, you will need to move out of the home.
Can a short sale be used to pay off a loan?
A lender will only accept a short sale if you can show both an inability to repay the loan and that the proceeds from a sale of the home could not fully repay the amount the owed. Once the bank approves a short sale — and you and the bank sign papers to this effect — the home goes on the market.
How long does a short sale stay on your credit report?
The short sale will stay on your credit report for seven years, but you can finance a new home purchase within one to four years of a short sale depending on credit score, loan type and down payment. Again, a foreclosure is even more severe.
