Short Sales 101: Estimates are that up to 50% of sales in the Georgia market are short sales and this statistic is likley to remain fairly steady for some time to come. I hope to address some common misunderstands/misconceptions when it relates to short sales in this post. 1.) A short sale means that more money is owed on the house/property than what the current market value. This money owed is most commonly made up of the mortgage(s) balance and costs to sell (Real Estate Fees). This amount owed can also include other liens such has back HOA dues, unpaid property taxes and so on. 2.) The Seller/Homeowner is NOT the bank. What is important for buyer’s agents and buyer’s to understand is that the seller still holds title. Some short sales may be close to foreclosure but they are NOT yet bank-owned and the seller still is the person who you initially negotiating with. The main difference is that there will be a contingency for those who are owed money on the house to agree to accept less in order to allow the sale to proceed. Think of it like a reverse financing contingency. 3.) Once the buyer and seller sign the contract, you have a binding agreement. This is a something that many agents seem to either not understand or not want to accept. They think that it only becomes a contract once those who are owed money agree to take less, this would be like saying on a regular sale there is no contract until the loan is fully approved and all contingencies are removed and they buyer will deposit the earnest money at that time. In addition, this often means the buyer will have to perform an inspection upfront before the contingency is signed off on. 4.) Time-frame: Lenders can take 60 or more days to evaluate these short sale scenario. You and your buyer most likely are not going to get an answer to this contingency in a few days. Conclusion: While this post only highlights some very basic information on short sales, it does illustrate the complexities one does have. It can’t be overemphasized enough that working with a real estate professional that has short sale experience is vital to the successful outcome on a short sale transaction
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