What is a Short Sale? Whether you are an investor, first-time homebuyer, or seller of Lake Tahoe property, you may encounter a short sale situation. Short sales are increasing as the real estate market in Truckee and Lake Tahoe continues to adjust and values decrease. Property owners are finding the current market conditions will no longer support the values their homes had at a time in the past. Buying or Selling a short sale property may be time consuming and at times trying, however, Buyers can come away with a great deal and Sellers can avoid foreclosure and damage to their credit.
A short sale occurs when a lender allows a homeowner in default to sell a house for less than the total amount of the loan. Sometimes homeowners can negotiate with lenders and have them split the difference between the sale price and the loan amount, which still must be paid.
There are many different approaches for both Buyers and Sellers of short sales. Because a seller needs to ask their lender for forgiveness on an unpaid debt, the short sale process is not handled as a traditional real estate transaction.
The basic process is as follows: An offer is submitted to a seller who then counters or accepts the offer. Once acceptance is obtained the offer along with a “short sale package” is submitted to the bank for consideration. This stage of the short sale process is reflected in the MLS with an “Active Contingent” status. Once the bank receives all of the required information they will obtain an appraisal or broker price opinion in order to establish the approximate current market value of the property. During this stage of the process a “negotiator” is assigned to further evaluate the banks position on short selling the property. The negotiator will provide acceptance or a counter offer to the buyers.
The timeline for a short sale varies widely, however, there is about 4-5 stages of the short sale process, each taking 4-7 days. A short sale may be further complicated if the loan has been sold to the secondary market because then the lender will have to get permission Fannie May, Freddie Mac or whomever their principal lender is. If the loan was a low-down-payment mortgage with private mortgage insurance, then the lender must also involve the mortgage company that insured the loan.
I am happy to help both buyers and sellers of short sales to assess each short sale transaction and find the best course of action to successfully complete each deal.