Things To Know Before Carrying Out A Short Sale
Print View - Published: Tue, 18 Jan 2011 at 9:09 PM
0 comments
It is important to know what a short sale is all about before understanding how not to short sale.
Initially, a short sale is not an instance where a property goes into foreclosure. In this case no sale is conducted whatsoever, instead the lender is just recouping the investment to cover or cut its losses. Additionally, a short sale is not a case where the seller agrees to reduce the asking price of a house, therefore making less profit, to encourage a quicker sale.
What a short sale is, is when the homeowner can no longer come up with the money for the property and hence wishes to sell. They might, however, notice that the property is valued at less than the outstanding amount of the loan meaning that if they did make a sale, they still have a deficit to make up. In this case, the lender may settle to waive the outstanding balance on the loan so as to cut their losses and avoid a foreclosure.
In this case, what the agent, must keep in mind is that in a short sale all decisions lay with the lender and the house owner is left without a say on the price. Although it is true to state that the lender would, obviously, be pleased with a better sale value the agent should not get greedy and hold out for a higher value. This is because a quick sale is needed and too many delays may lead to the lender cancelling all negotiations and proceeding with foreclosure.
Alternatively, the agent shouldn't try to rush the sale by selling at a very low price. Once more, the lender is the decision maker and if the value is very less then they will not accept and proceed with foreclosure. If the bank wishes to foreclose, whatever may be the reason, then the seller loses their home and credit rating, while the agent loses any potential commissions.
One more thing that an agent should not do when it involves short sales is leaving anything open for negotiation at the back end. Once the proposal has been submitted to the lender the conditions of that proposal, if accepted, must be adhered to exactly. If at any point after the proposal has been submitted and accepted, either party wishes to change anything, then the lender is likely to pull out of the deal completely and go ahead with foreclosure.
Due to this it is vital to have everything finalized before submitting any proposal to the lender. This includes all negotiations on price according to results from a home inspection, to the commission received by the agent.
The main factor in accomplishing a successful short sale is not to forget that the lender is the final decision maker and must be appeased at all times. When it involves commissions, price and timing, the seller has no say in the matter as the house is effectively no longer theirs.
Keeping this is mind would help you to concentrate on the priorities of the deal and help to guarantee a quick resolution which is the most effective for all the concerned parties.
About the Author
Our products are built for small businesses and individuals who want to take their Real Estate or Shortsale Businesses further. Through powerful educational tools and automation we hope to help you make your businesses grow. Visit http://www.shortsaleology.com and know more about shortsales, foreclosures and short selling.
Want More Free Credit and Financing Tips?
You'll get insights, interviews and helpful tips to repair and grow your credit and borrowing power all for free!.
The Credit and Financing eTips has a No Spam policy. Your information will never be shared or sold.
