Short sales, because they happen under a very specific set of circumstances and are done in a specific way, can be confusing both for buyers and sellers. It’s important to understand everything you need to know before selling your home through a short sale. Here are the answers to a few of the most important things that you should know about short sales:
1. What makes a house eligible for short sale?
The three most important requirements for a short sale are the following: First, you cannot be available for a loan modification that would help you refinance your mortgage. Second, you need to be able to prove that you have had financial problems and are truly unable to pay off the loan. Finally, you must owe more on your house than the house is actually worth.
2.What makes a short sale different from a foreclosure?
There are actually a couple of things that make a short sale different from a foreclosure. The first is that in a foreclosure, the homeowner is generally excluded from the process of selling the house to a great extent. However, in the case of a short sale, the homeowner is quite involved in the process.
For this reason, as we will discuss later, it is important to have a real estate agent working on your behalf during the process of short selling. The other important thing to note about a short sale is that it will do much less damage to your credit than a foreclosure, and will impact your ability to take out future home loans for a significantly smaller amount of time.
3. As a seller of a short sale property, do I need a real estate agent to be involved with the process?
As a seller of a short sale property, do I need a real estate agent to be involved with the process? Short sales can be quite complicated. As such, it is probably advisable to get in contact with a company that has experience in the realm of short sales, who can help you with the complicated paperwork involved in short selling your house. This does not necessarily mean a real estate agent.
Unless you have a very firm grasp on what is required of you as a seller in a short sale, it is better not to risk messing up the process with missing or faulty paperwork. Because rules regarding short sales vary from state to state, it may even be advisable to hire an attorney with expertise in the area to protect yourself from potentially being sued by the bank.
4.As a buyer of a short sale property, what can I expect?
Similar to a foreclosure, a house that has been short sold is likely to be in need of some repairs and not quite live-in ready, so be cautious about buying such a property and understand the risks involved. That being said, it is possible to get a bit of a deal with short sold properties in terms of cost, if you know where to look.