Tag Archives: foreclosure

Considering a Short Sale? Here’s what you need to know.

 

In Atlanta’s real estate market today, short sales and foreclosures make up about half of all real estate transactions. In fact, short sales represent a significant portion of real estate sales activity in Atlanta and are becoming increasingly more common than foreclosures. Though they require a bit more red tape than a normal real estate sale, short sales can benefit all parties if they are all willing to make some sort of compromise.

First, let me explain what is a short sale anyway. When a homeowner sells a home for less than the amount of money owed on the mortgage of that home, that sale is called a short sale. Sometimes, you might hear people refer to it as pre-foreclosure. In most cases, the homeowner has fallen behind on mortgage payments and cannot afford to continue making mortgage payments on the home. Instead of waiting until the lender decides to repossess the property, the homeowner will petition to sell the house for less than the amount owed on the mortgage. In some cases, the lender will even forgive the portion of the mortgage loan not covered by the selling price. Even though foreclosures and short sales negatively affect seller’s credit score, the damage incurred from a short sale can be mitigated if the seller can convince the lender to report the debt as “paid in full.”

For the lender, short selling a property is a lot less hassle and a lot less paperwork than taking on a foreclosed property. They are just as tired of foreclosures as the rest of the population. A short sale transaction benefits them in that they don’t have to deal with selling a property that has been vacant for a while and most likely needs repairs. The lenders are the shot callers in the short sale process and are the ones who set the selling price.

It’s unfortunate for the sellers and the lenders that these homes are selling at depressed price levels. For buyers, it’s a deal. Even though a real estate short sale can still take months to have a decision made by a lender, buyers still get a deal on a property that will most often require less work than a foreclosure.

If you’re in the market for a home in the Atlanta area and are considering a short sale, here is a list of things you want to consider before you jump in head first.

Understand what you’re getting yourself into. Short sales take a while to close and can involve extra effort on the buyer’s part. Save yourself time and unnecessary stress by getting disclosures up front.

This is not a DIY project. As I mentioned before, short sales come with a lot of red tape. It’s imperative to work with a real estate agent on the Go Getter Team who knows the territory and is able to navigate you to a successful close.

Know the condition of the property. In a rush to get rid of the property, sellers may not always be so forthcoming with unfavorable information about the condition of the property. It’s important to have the property professionally inspected before you commit. The Go Getter Team has a list of knowledgeable real estate inspectors on our Preferred Service Providers List.

Be sure the sale has a prayer of closing. Since lenders generally approve of short sales based on the seller’s financial situation, the sadder the story, the better. Most lenders require a letter of hardship, proof of income and assets, a comparative market analysis and a list of liens to consider approval of a short sale.

Be realistic. If you are in a hurry to purchase a home, do not consider a short sale. It’s definitely a waiting game. If you do decide to go for the short sale home purchase, make a reasonable offer that the lender will actually entertain. Lastly, be realistic about where closing costs are coming from. In these cases, cash is the greatest financing alternative for buying a short sale in Atlanta.

What are the short sale tips you’d like to share?

 

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Homeowners Should Consider Short Sales (Pre-foreclosure) When Possible

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