Is a Tampa Bay SHORT SALE worth it?
What is a short sale? A short sale is a property that is being sold for less money than the mortgage that is owed on the property.
The Owner/Seller is still in possession of the property, but the bank who is the lien holder has to approve the sale and the short payoff.
Even though the bank does NOT own the property, they are in control of what the price and terms will be accepted on the short sale.
Without the bank's approval there can be no short sale...sometimes there are 2 or 3 banks that have loans on the property. When an owner has difficulty making the house payments, often they take out more loans.
Each of the lenders must agree to take a short payoff...that in itself can be a deal killer, because not all banks will agree.
Sometimes the first mortgage holder refuses to pay off the subordinate lien or others refuse to take what is being offered. Sometimes the lender will only approve doing a short sale and sometimes they will actually give a price and terms at which they will approve the short sale. Even then, banks have been known to change their mind prior to closing.
Is the list price of the short sale the “real” price?
Good question...usually not. If there is only one bank and they have agreed to take a short payoff, then yes they might have a “Bank Approved Price”, but even that can be subject to change.
Short sales are typically a long process with no control of the outcome, so short sales are not for someone that needs a property now, has limited funds for “extra’s” or expects the bank to be reasonable.
Many agents try to avoid showing short sales, so often the sellers agent will price the property artificially low to stimulate showings.
Sometimes the seller's agent will also hire an attorney or short sale negotiators to deal with the bank with that cost being passed off to the potential buyer...that has usually been $2K-5K.
Here are some Common Problems with Short Sales:
- It may take several months for the bank to respond.
- The bank might never respond to the short sale offer.
- The property may go into foreclosure while you wait for an answer.
- The bank may ask the seller for a deficiency judgement.
- The seller may become uncooperative or file bankruptcy.
- The bank may want the seller to pay off other debt on the property.
- The bank may ask for more money than the full listed price or more than the appraised value of the property…
At one time, there were lots and lots of short sales on the market and we sold a bunch. Today, I don’t expect too many to be on the market because with the drastic property price increases, sellers have equity in their property. That means they can sell for enough to cover their existing debt and not have to short sell it.
What is the difference between a short sale and a bank foreclosure?
A short sale is still owned by the owner of the property and more than likely heading into the foreclosure process, but not yet foreclosed on. The owner needs the bank's approval to take a short pay-off.
A foreclosure property is owned by the bank and the previous owner/seller is out of the house with no more ties to the property. After a foreclosure sale the bank is now the new owner.
We are short sale certified, so we do show and understand short sales. If a short sale is available, fits your needs and you are patient, you might get a bargain...or you might decide that the uncertainty is not for you.
Call us 727-202-9130 We want to hear from you...