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What is a Short Sale?
A real estate Short Sale is when a Lender agrees to sell the home at a price that is less then what is owed on the property.
Buying a Short Sale
When you purchase real estate, sometimes it can be purchased as a result of a real estate Short Sale which is nothing other than the bank agreeing to sell the home at a price less than the mortgage balance. As a result of the home being sold as a short sale people assume that they are getting a great deal. This is not always the case. Although purchasing a short sale is often a great way to purchase real estate, many times due to the real estate market going through a downturn you can purchase a home and still experience a reduction in value. The key to having success when you purchase a short sale is to make sure that you research market conditions and understand the current market where the home is located. Another important factor is that you need to be able to hold and carry the home for a minimum of 3-5 years until the real estate market improves. Especially in the San Diego area you will have a hard time creating quick equity unless you are doing a major remodel to add real value to the home.
The real estate Short Sale Process
What does a buyer need to know? The short sale process can be very confusing because it is not as common as a regular real estate transaction. Typically the short sale process takes longer because you have to deal directly with the bank and gain their approval to sell the home. When a client makes an offer to purchase a real estate short sale they do not have the benefit of getting a quick response like they would from a regular seller. Understand that a short sale may be a great way to find a home but be patient because some banks can be very slow.
What does the seller have to do? The short sale process begins with the seller showing the bank that they have a financial hardship. All banks typically require 2 years of tax returns, 2 years of W2s, most recent bank statements for all accounts and a hard ship letter. The process of getting approved for a short sale is the exact opposite of what a borrower goes through when they are trying to obtain financing. When a borrower obtains financing they have to show that they can afford to make the mortgage payments. When a seller is trying to get the bank to approve them for a short sale, they have to show that they have made every attempt possible to try and make the payments but are no longer able to do so. If a lender sees that they have other liquid assets they will not be very likely to help a seller out and approve them for a short sale. Also a bank will not usually consider you eligible for a short sale unless you are late in your monthly mortgage payment.
Buying Short Sales in San Diego
San Diego is an area that has experienced a large increase in home values the last few years and as a result of home values increasing and the real estate market going through a correction or cooling off we are seeing home values come down which can result in the home being worth less than what the mortgage balance is. As a result of someone not being able to make their mortgage payments or need to sell their home this creates a short sale and results in the bank having to approve the property to be sold for less then what the mortgage balance is. For investors, this can create opportunities to purchase real estate.
Tips for Buying Short Sales
The best tip I can give you when you are considering a short sale purchase is to be patient and do your homework. It comes down to knowing the market you are looking at buying a home in and being patient as a short sale can take longer than a traditional sale. Hopefully if you time the market correctly you will purchase at the bottom of the market and only see values increase. Check local real estate data to find out what the 5 and 10 year average home price has been in the area you are looking to purchase in. Looking at a 10 year window of home values will give you a much better indication for where the market has been and may be going. Remember to pick up the phone or send us an email. Obviously Team Aguilar would love to help you buy or sell real estate in San Diego.
Real Estate Short Sale Services
Team Aguilar can take you from start to finish with your short sale and help you with every aspect along the way. The process of helping a homeowner complete a short sale can be a very complex process. Every bank is different and some are very open to helping you while others can be a bit more challenging. Having an experienced real estate agent can make all of the difference. One item that sellers often overlook are short sale tax consequences. If they know what they're doing they will truly provide a very valuable service.
Do's & Don'ts of a Short Sale
What you need to do if you can't make your mortgage payments is take action. You may have time to do a short sale and not have a foreclosure show up on your credit. The key is taking action, speaking to your bank or finding an experienced short sale real estate agent. You don't want to waste time because your home may go into foreclosure and time is your most valuable commodity.
Links below to additional information and pages on our website regarding short sales.
What do you do when you need to sell your home but you owe more to the bank than what you can sell it for? A real estate Short Sale may be your best option. Please read through all of the options on our short sale options page. A real estate short sale is only one of your options. You may have some other options to consider as well.
This is a sample of what documents you will need when we process a real estate short sale for you. Every bank will request the same documents from every seller.
If you fall behind in your mortgage payments you will receive a lot of mail offering help. Be aware that many of these people are looking to take advantage of someone in a difficult situation. Here is a list of the various foreclosure - short sale scams that we see.
Foreclosures have risen 45% since January compared to a year ago. The experts within the real estate industry to not see this number getting any better in the near future. Read some of the news regarding the rise in foreclosures.