In real estate, a short sale doesn’t have anything to do with the amount of time it takes to close (in fact, it’s can be the opposite of “short”). Instead, it refers to the amount of money the sellers owe and what they’re charging for the house.
What is a Short Sale?
A short sale is the act of selling a home for less than the amount of the mortgage still owed on it. For example, someone who owes $200,000 on a home may end up selling it for $190,000, leaving $10,000 still owed to the bank.
This can happen for several reasons, such as a home suddenly losing quite a bit of its value.
How Can People Sell a House for Less Than They Owe?
In order to have a short sale, the seller needs approval from his or her lender. The lender is the one that’s going to lose money – but sometimes they’ll agree. Typically, lenders agree to short sales because they don’t want the home going into foreclosure (then, they stand to lose even more money).
The seller can’t list the home for sale until the lender agrees, and the lender won’t agree until they’ve reviewed the seller’s:
- Hardship letter
- Income statements and monthly expense statements
- Proof that other types of loan modifications have been denied
- Foreclosure notices, if there are any
If the lender agrees to a short sale, the seller can then list the home for sale.
What if You Want to Buy a Short Sale?
If you want to buy a short sale, your Charlotte Realtor® can walk you through the entire transaction. You can make an offer, which the lender will consider – but it can counteroffer, deny or accept.
Sometimes lenders deny because they believe the seller can make the payments after all, or because your offer is below the home’s fair market value. The bottom line is that the lender can deny your offer for various reasons, and it takes several weeks (sometimes several months) for a lender to make this decision.
Are You Buying a Home in Charlotte?
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