In real estate, a short sale is basically where the seller of the home is actually upside down. They owe more than the home is worth and they are asking the bank to take less than they owe. Now, that becomes a negotiation between the seller, the buyer and the bank. The rules are the same almost in every state with some variations. If you are in the Middle TN real estate market, you might want to check the rules and regulations with you real estate agent too.
When the buyer makes an offer on the property and the seller accepts the deal, this doesn’t mean you have a deal. The seller has to provide different types of paperwork to the bank. After that, the bank will determine if the price you are offering is a fair price or not. The entire process would last anywhere from two weeks to several months as well. There is a law that says it’s supposed to be finished in a certain period of time. But it’s not necessarily that important in many cases.
If you have found a short sale and if you make an offer, you need to understand that it will take time. You have to be patient. Another important thing you might find on a short sale deal is if the seller has more than one mortgage, it gets far more complicated. So, if the seller has 2nd or 3rd mortgage and there isn’t enough money to even pay off the first mortgage, then there isn’t anything left for the 2nd and 3rd mortgagee. They won’t get anything.
If you are in this situation, it gives you cushion for negotiation because there is no incentive for the 2nd or 3rd mortgage to agree to a short sale if they are not going to get something. Therefore, the 1st mortgagee typically has to provide some cash into the deal to make sure those 2nd or 3rd lenders actually get a little cash to make it worth a while to do.
Apart from all these factors, short sales have a lot of benefits for both the buyer and seller.
Benefits for Buyers
• The buyer is buying a home that has been lived in recently
• The house has been taken care of and doesn’t need any major repairs
• Every little information about the house would be available because it’s a part of short sales process
• The buyer can buy the property at a discounted price.
Benefits for Sellers
• The biggest advantage for the seller is that he/she would be able to pay back the loan.
• Short sales won’t harm his/her credit score as the foreclosure would.
If you are in the Middle TN real estate market and you are interested in buying a short sale, you need to understand that it may take some time but you can find a good deal with a discounted price. You are not only helping yourself but the seller too who would be able to pay his/her loan off.