One of the fast growing trends in real estate is the short sale. In this article we take a look at the various procedures and benefits of the short sale method. From the uses and the reasons for its growing demand, this article will attempt a detailed analysis of every aspect of a short sale procedure.
The Different Stages of a Short Sale
Unlike the name, a short sale is not one of the fastest processes. While this is true that it is faster and easier than the normal process of selling and buying a foreclosed home, there are a number of steps that go into furthering the short sale procedure. These are:
Deciding If a Short Sale Is Right For You: There are many pro’s and cons to doing short sales. The first step is deciding if pursuing a short sale is right for you.
Submitting the Offer: The second step that is part of the first phase of short sales is submitting the offer. The bank or lender that you might approach is not likely to approve of the proceedings until and unless and buyer shows some interest in the property. In order to get the bank’s seal of approval, it is in the best interest of the seller to ask the real estate agent for a list of comparable market values. This is because the lender is not likely to aid the seller if the price is way below the market value. A submission of the offer is the second stage of the sale proceeds and it is often one of the most critical stages in the entire process.
Listing Agreements, Pre-approval Letters and Exchange of Documents: After the offer has been submitted, the real estate agent who is hired is likely to submit the purchase of offers, a list of items that includes the listing agreement, the pre-approval letter from the buyer along with a copy of the money check and the seller’s short sale package to the bank. After these documents have been submitted, we enter the final stage of the sale that includes the actual transfer of deeds and other formalities related to the finalizing of the sale.
Waiting for the Bank’s Approval and the Conclusion of the Sale: The final stage is a bit of a waiting period. This is because the bank has to approve of the transaction and carry out their own paperwork to look at the market value and other variables that affect the sale overall. The one thing that should be ensured is that the real estate agent who is hired keeps a check on the bank proceeds by making regular enquiries. Pending accounts might delay the sale by months on an end, which can ultimately cause many buyers to back out. After the bank has approved of the paperwork, the sale is concluded along with the transfer of deeds and the final transaction between the buyer, seller and the bank.
Things to Look Out For During the Sale
When it comes to real estate purchase, there are some things that should be considered. These are:
If you are a seller, it is important that you hire a good real estate agent. Efficient agents are the key to a successful sale as they keep a regular check on the proceeds. Looking at reviews and comparing the success graphics of different real estate agents might be helpful when it comes to hiring the best one.
Many sellers are disheartened by the length of the short sale and back out in the last minute resulting in unforeseen loses. To avoid situations like this it is a good idea to keep in mind that the success of the sale depends much more on the transactions than on the time. Some long term perspective is often essential in order to make a good profit in the real estate game.
Since short sales can get a little tricky, it is a good practice to keep an eye on every step of the procedure. This will reduce the chances of scams and errors and also ensure that your bank verification process runs smoothly and in a fast and efficient manner.
There are some banks that have hidden tax and fee schemes that one might have overlooked. In cases like this, the debt that you owe is more likely to remain even after the sale has gone through. One of the things that you must ensure is to look through the fine print and ascertain whether the bank will lay off the debt and accept the proceedings of the sale agreement.
Benefits of a Short Sale and Who it Is For
A short sale is of prime benefit to those sellers who happen to be facing unforeseen financial crisis. Due to a number of causes that include:
Reduction of income
Demotion in the work place
Loss of shares in the market
Job transfer, and
Home sellers often find that they do not have the adequate funds to pay off the mortgages. It is in this condition that the short sale is extremely beneficial to the seller as he might then be able to pay off the loans satisfactorily. In most cases, the sale results in a both parties being satisfied as the seller is rid of the mortgage and the buyer has made a smart investment in the property.
All in all, short sales are extremely advantageous to all. Since there are some aspects that demand careful scrutiny, the best way to make the sale is by hiring the services of a good real estate agent. Tricky though they may be, at times, short sales are definitely one of the more popular and beneficial estate schemes in the market today.