What is a Short Sale?
A Short Sale is a sale of a property in which the sale proceeds fall short of the balance owed on the mortgage. Short Sales in Columbus, Ohio may occur when market conditions cause home values to decline or the property owner suffers an economic or financial hardship. The sale is “shorted” when the Seller is unable to pay all the liens against the house at closing.
Why does a Short Sale happen?
The investor or bank decides that selling the property at a loss is better then taking back in foreclosure. Foreclosures in Columbus, Ohio cost banks tens of thousand of dollars in legal fees and maintenance costs. Both the home owner and bank must agree to the short sale process to try and sell the house. A Short Sale allows the owner to avoid foreclosure and maybe the simplest, most economical solution to the problem. Banks will incur a smaller financial loss than foreclosure, and most banks in Columbus are not in the business of owning real estate.
What is the difference between a Short Sale and Foreclosure?
Short Sales, sometimes called pre-foreclosures, are different from foreclosures in that a foreclosure is an action forced by a lender, whereas both lender and borrower consent to a Short Sale. Any Short Sale contract includes a contingency where the lien holders must approve any sale of the house. Because of this contingency, potential buyers can waste considerable time and money waiting for a house that will never close. Even a full price offer does not guarantee acceptance from the lien holders. Junior lien-holders have the right to negate any sale of the property. This often happens because the second and third lean holders receive very little or nothing on the sale.
Is it a difficult process buying a Short Sale?
Yes, in many cases it is much more difficult buying a Short Sale then a foreclosure. In a foreclosure, the bank has taken back the deed and ownership of the property. In a Short Sale scenario, the property is still owned by the homeowner, but the bank must approve the sale.
Multiple levels of approvals and conditions from the banks and lien holders make Short Sales a difficult process. Many never make it to closing and are ultimately foreclosed upon. It can waste considerable time and money for a prospective buyer who anticipated a sale.
You might want to think twice about making an offer on a pre-foreclosure, Short Sale home. It's not as simple as you may believe, and very few close in 120 days or less.
Do I need a Real Estate Agent for a Short Sale?
An real estate agent with experience in Short Sales will help to expedite your transaction and protect your interests. You don't want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner.
How long do Short Sales take?
Lenders are so swamped with Short Sale submissions that many can't respond in timely manner. It can easily be several month before you receive a reply to an offer. A lengthy response time can also mean the bank has internal organization problems.
In some real estate markets, fewer than 10% of Short Sales close. The Columbus, Ohio market it is a little higher. Just because the home is listed for sale as a Short Sale doesn't mean it will ever close. All sales are contingent upon lender or third party approval.
If you decide to make an offer on a Short Sale, patience will be important. Threatening to walk away from your offer is meaningless to banks. Your best bet is to stick it out and wait, providing you truly want the home.
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