Okay, seems that a lot of people get confused about short sales. I may be a bit off on some of this, so feel free to correct me in the comments. This is how I understand it.
Q) How long do short sales take?
A) From speaking to multiple people who all they do is short sales. The general timeframe is 3-6 months, and it can take longer. So not a great idea if you are under time constraints. Hence why they are not as appealing to the general buyer. Not to mention if you wait 3-6 months, and then find out that the bank would rather foreclose.
Q) If you are not behind in your payments, but you are upside down in your home, can you get a short sale?
A) This is a bit of a tough call. Most banks require a “Hardship” letter, and for you to be 2+ months behind in your payments before they will even consider a short sale. Now, there may be extenuating circumstances to where they may consider it before that timeframe, but by enlarge they figure you aren’t behind, why should they lose money?!
Q) I hear short sales are the up-coming thing for real estate agents. Are you seeing this too?
A) I heard a statistic a couple of months back. 8000 short sales were listing in the greater indianapolis real estate MLS system last year. Only 300 of those sold. From talking to short sale agents, they can be profitable, but it takes a long time to get paid, and most people would consider them not worth the time or effort. Most investors who are looking to buy short sale homes, consider them fluff… If the deal happens, then great, otherwise, most of them aren’t counting onit.
Q) Who are the best candidates for getting a short sale approved?
A) Tough question also, but generally if your home is worth more(in current condition) than you owe on the first mortgage, your chances of getting a short sale completed are higher. HELOC’s, Second mortgages, etc get shafted in a short sale, but they would rather take the shaft, then go to a sheriff’s sale and not make a dime. Not to say they wont go kicking and screaming, but they generally will settle for pennies on the dollar.
Q) If I have PMI or insured mortgage, how does that affect the chances of my home’s chances of being short saled?
A) Generally, this makes it REALLY hard to get the short sale approved. The bank is guaranteed to get their price, so in most cases they are forced by the insurer to foreclose and sell.
If you have other questions about short sales, etc. I have quite a few contacts, and would be happy to send those questions off to experts.
Eric…
I really agree with you….