In 2008, the entire US economy suffered and entered a downward swing. Home prices had become overly inflated through a long series of speculations in which investors bought homes not because of their safe and secure growth, but because everyone was buying them and the price was skyrocketing. At the time of the rocket almost anyone could enter a house and the sad story is that almost everyone entered a house.
Story after story of young families looking to get into a starter home yet still having to pay astronomical amounts for even the most modest home and dealing with stifling monthly payments. When the housing market suddenly deflated, these same young families, as well as many other homeowner situations, were left with real estate assets that were worth nowhere near what they paid for them, leaving homeowners with a negative net worth. and a huge mortgage. The concept of the short sale for the first time became a reality.
A short sale is when the homeowner doesn’t want to completely damage their credit by moving away from their house, so they go ahead and sell the house at below market price in hopes of getting it out of the way quickly. If there was no lender involved this would be a great idea, an injured homeowner could quickly get rid of their home and make the buyer really happy. Banks don’t want to be taken advantage of as much as it is their money that is tied up in the house and until the borrower fully pays off the loan and the house, the bank will hold the property as collateral for the loan.
The first thing a potential consumer should know about short sales is that they rarely close. Because of the banks’ reluctance to take advantage of them, they will have a hard time accepting the sellers’ offer to undermine the house heavily. A bank would prefer to repo the house and then sell it at market price.
The second thing a consumer should be aware of is that there are specialized agents who deal with short sales. If you really want to buy a house that is being sold short, you should seriously consider getting a specialized agent. The specialized agent will know what amount will be accepted and which lenders are most likely to allow the short sale to go through.
Real estate agents know that there is a huge market for short sales and therefore many of them have started advertising that they will post short sales. Beware of any agent who advertises that they specialize in short sales and has never closed one. Hire an agent who can do some serious magic and shut one down.
When the seller decides that he is going to make a short sale, he must show a series of documents that show that he is in a desperate situation. They have to show things like your W-2, your bank statements, a hardship letter, etc. Make sure the agent listing the sale has all of these documents; otherwise, the deal will most likely never close.