There are plenty of mixed feelings about short sales. Those who prefer short sales like that it can save them thousands, and they are typically in much greater condition than foreclosures. Sellers and banks typically prefer them because they are both able to avoid a foreclosure process which saves each party money. There are many banks are “paying” those who have loans with them to sell their home as a short sale.
Those who dislike short sales typically don’t like them because the process can be quite lengthy, and all too often it ends up falling through. This is often a headache that many potential buyers and real estate agents would rather avoid than save money.
While there are pro’s and con’s to short sales, exactly what a short sale is can be pretty difficult to understand. Essentially, if a homeowner is no longer able to pay their house payments but the house is worth less than the amount owed on the mortgage, then a short sale allows a homeowner to sell their home and settle any mortgage debt.
A typical short sale process at a bank is:
- A bank acknowledges receipt of the file which could take 10 days to a month.
- A negotiator is assigned (30 to 60 days).
- A BPO (broken price opinion) is ordered. However, the bank will probably refuse to share the results of the BPO.
- A second negotiator may be assigned. This can take another 30 days.
- The file is sent for review or to the PSA (Pooling Servicer Agreement). This can take 2 weeks to 30 days.
- The bank may then request that all parties sign an ARM’s Length Affidavit.
- The bank issues a short sale approval letter.
- The buyer cancels.
If you are looking to purchase a home, and are interested in a short sale property, be sure that the agent you select has had previous experience with short sale transactions and negotiations. This is essential if you want to ensure that you will be able to close on a deal.