The Deal with Short Sales
In a short sale, the bank that holds the mortgage agrees to discount the loan balance due on a home because of the owner’s economic or financial hardship. This means that, on a house that has a mortgage balance of $200,000, the lender may agree to allow the owner to get out for less than that – say $180,000. This can make an opportunity for you to get a deal. But, they are not usually easy transactions.
First, the realtor selling the house should have great communication with the mortgage company’s workout or loss-mitigation department. This is the group who will be determining the amount of money they are willing to take for the balance of the loan. And this must usually be approved before a sale is even contemplated. This is complicated by the fact that few lenders are located here in Austin. It requires patience and lots of time to dedicate to this part of the process.
Second, if you need to move in right away, this is probably a bad option. These transactions can take up to 90 days to close. They are complicated by the fact that the buyer’s agent cannot usually speak to the bank, and has to go through the bank’s agent – who is usually not getting a full commission and may have less incentive to pay attention to the listings.
Third, these sales can be complicated if there are multiple mortgages (remember the days of the 80-20 or the 80-10-10?).
Finally, the banks will rarely negotiate on repairs or other issues. These – like HUD homes – are as is. But the banks don’t give allowances as are often given in short sales.
For more information on short sales, feel free to contact us.
