Short Sale Myths

Some will tell you that lenders are dragons, and it simply isn’t correct. They are ogres. But that’s not a reason to not do a short sale.

These types of sales have gotten a horrible reputation from real estate agents, sellers and buyers, for many reasons. For every bad story detailing a horrible experience, you’ll also find successes.

Here are the common 4 Myths::

Myth #1: They Take Forever to Close

The quickest I have been able to close any of my listings has been in 45 days. But I’ve also had buyers who were able to take the place of another buyer, after the first buyer walked away before approval, and close within 30 days.

An average short sale takes:

• 7 to 10 days for the lender to acknowledge getting the complete package, which consists of the seller’s financial documentation and the buyer’s purchase offer.
• A negotiator is assigned. Another thirty to fourty-five days for a value to be obtained.
• Another two to three weeks for review and approval.

Myth #2: Short Sales are Over-valued

In some highly populated areas, listing agents may purposely price the house under market value. It’s a method agents use to attract more than one offer.

After all, the list price on a short sale is not overly accurate, because no one knows what a bank will accept. But many lenders will review a price at a minimum of 85% of market value. Some purchase offers are so unreasonably low and they get rejected immediately with no review.

Myth #3: Lenders Won’t Accept a Large Reduction

Homeowner’s are often amazed to find out that in places where prices have fallen over a five-year-period, a house can be valued at 50% or less of what the seller paid for it. However, lenders realize that certain areas are rapidly declining in value. Either way, the lender will do their own research and they know they can’t sell a house for more than it is worth. The sales price of the home is not based on the loan amount; it is based on the fair market value.

Myth #4: Sellers Must Miss Mortgage Payments

Lenders approval is based on the borrower’s hardship and the fair market price of the home. Some sellers may find it difficult to pay the monthly, but are managing somehow and have not fallen behind.

While is true is that sellers who have missed payments get the file looked at quicker. The homeowner can still be approved without missing a mortgage payment. One great advantage of not missing a mortgage payment is that the homeowner may be approved to purchase another home immediately (according to Fannie Mae guidelines).

This los angeles short sale article provided by Socal Short Sale

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