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Short Sales help in Staten Island, NY
SELLER AND BUYERS get confused when talking about a short
It's actually simple...unlike bank foreclosures, where the homeowner defaulted on the
mortgage and the bank has taken back the property, a short sale
homeowner still has control of the property, but is seeking
relief from the total mortgage
balance due the bank.
Short sales usually are a result of the homeowner being underwater
(meaning more is owed on the mortgage than the property is worth),
and the market cannot recapture sufficient funds from a sale to pay
the balance. But, it can also be the result of financial hardship, a job loss, medical
bills, or over borrowing by putting additional mortgages on the
Government liens can also reduce the amount of money settled from a
short sale thereby leaving less money for the mortgage balance.
In most cases, a homeowner seeking short sale relief, is still
occupying the property, but is probably applying limited amounts of
money to expenses. And although the mortgage is still running, short
sellers are known to stop paying many bills and even their mortgage
payments if things are that bad. Some owners have been known to stop
making mortgage payments, so they can prove that they’re really in a
financial bind. This does not help their situation as penalties are
added into the mortgage balance, thereby making the amount due even
The real story behind a short sale property is that the burden to
get agreement from the bank to take less than the amount owed it, is
on the homeowner and not on the bank. To protect the bank, there are
short sale documents required by the bank, which must show that 1),
no proceeds from the sale are going to the seller, and 2), that the
seller has no assets to make up any shortfall. This is a gray area,
due to the fact that the information between both parties is subject
to honesty and verification. This issue itself is a prime reason
that short sales can take a lot of time to get approval from the
Many sellers just want to get away from a house, and think the short
sale route is the way to go. It’s not that simple. If a seller uses
the underwater situation to get a bank to take less, it usually has
to be proven that the property’s overall value is verified through
the appraisal process. If the value is greater than the amount being
negotiated between the owner, the bank and the buyer, the bank will
balk at a sale under these conditions, and want the property sold
for more. This happens more or less depending on whether the area is
showing a rise or decline in selling prices. Short sales don’t mean
a house has to sell for less, it just means the owner will have less
to give the bank, becoming a short sale.
Short Sale transactions can be filled with potholes, especially for
the buyer. This is due to the fact that a buyer is negotiating not
only with the homeowner, but the bank as well. The homeowner may be
happy with the sales price, but the bank may not. Thereby, the
1. It can take a long time finalize a short sale.
Normally when you make an offer on a typical house, you'll hear
back within days, or even hours. But banks move very slowly these
days because they are overloaded with cases. You might wait 30 to 60
days for a response, perhaps longer if there's a second mortgage on
the property and therefore a second bank. The total process can
easily take as long as six months from start to finish. "For someone
moving a family or relocating that kind of timeline is incredibly
2. Your offer can't be contingent on selling your current home. Banks
generally won't accept offers on short sales if they're
contingent on selling your current house to get the funds you need.
"Even if the buyer is already under contract, there are just too
many things that can go wrong." So unless you're a first-time
homebuyer, or you don't need the equity from your current home, or
you're a real estate investor, it's unlikely that you can make a
short sale work for you.
3. It's an as-is sale, or maybe not.
Banks also typically won't consider short-sale offers that have
inspection contingencies in them. Repairs usually have to be worked
out between the buyer and seller beforehand. So a buyer should do a
house inspection before paperwork is sent to the bank. A buyer could
spend $500 on the chance that a deal acceptable to all can be made.
It’s the risk the buyer takes, and you probably wont get the
homeowner to reimburse you for your expenses if the bank rejects the
As long as you're prepared for these hurdles, you may just land
yourself a bargain, or not. There’s no guarantee that because you
bought a short sale, that you saved a lot of money. But make sure to
work with a Realtor who knows the ins and outs of the process and
can protect your interests throughout the negotiations. But you
should remember that Short Sales aren't necessarily identified on the Internet, but local
MLS data usually indicates that the property is a short sale. You
need to ask your agent whether a house is a short sale before
looking at it.
If you find a house that's a
Short Sale, and you just have to have
it, make sure to get yourself a mortgage pre-approval -- another
short-sale requirement. Work out
your offer with your real estate
agent, allowing for give-and-take negotiations. Don’t low-ball too
far below the asking price, because your probably going nowhere with
that. When the bank finally replies, it will more than likely
counter with a value they or their appraiser puts on the
property. Offer them somewhat less than that, and work from
there. You’ll know what you feel the house is worth to you,
and that’s your purchase price.
Sometimes you will hear that it is a “pre-approved short
means that somewhere during the listing history, there might have
been negotiations that arrived at an agreement price, but didn't
come to closing. That
number might remain the same, but you cannot
always depend on it. Banks periodically update their value
conclusions without anyone knowing, and raise the bar on the
Your agent can put language in the offer letter stating that if you
don't have a response by a certain date (perhaps 60 or 90 days out
-- however long you feel like you can wait), you have the option of
retracting the offer. That gives you an out, just in case. However,
because many short sales fall by the wayside, lawyers have been
known to charge an up front non-refundable deposit to represent you
in a short sale contract, just in case they have nothing to show for
Short Sales are a way of life in these economic times.
They can be
good, or bad. Because each short sale property has it's particular
issues, there is really no way to determine the outcome. But what
can be of great use to a buyer, is they the work with an agent with
short sale experience. This type of agent can help cut through some
of the obstacles and make the process easier.
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