In a market of increased homes on the market that are in the process of foreclosure, or that have been foreclosed already, REALTORS® are dealing with more and more properties needing unique marketing. In some of these transactions, the seller does not have sufficient equity to sell the property without coming to closing with additional cash to fund the difference. Where the seller does not have enough equity, does not have money to make up the difference, and has to sell due to circumstances outside his or her control, the seller may contemplate a “short sale”.
The short sale may be described in many ways or phrased in many ways but the bottom line is when a property is worth less than what is owed to the bank it’s a short sale. The sale price will not satisfy the note on the property. “Subject to bank approval” is quite simply a contingency. It is very similar to “subject to an inspection”.
When you look at short sale properties keep in mind you may be waiting 2 weeks to 120 days for an answer and even the then the response might be a “No”. The banks are getting better and faster at processing these type offers but they are not like dealing with a traditional sale or bank owned sale. That being said with patience and due diligence the short sale can produce some very good deals on the right property for you.
The short sale offer your write will most likely have the phrase “subject to bank approval” written in, that simply means what it says, that the bank has the final say on what they will or will not take for the note owed on the property. The seller is these situations can not be the final say as the seller does not have enough to satisfy the bank on the note.
Foreclosures, bank owned, short sales and contract for deeds are all becoming more popular in today’s real estate market and all have their pros and cons for both buyers and sellers but none are necessarily a bad thing, just do your homework, speak to your agent and understand the process before heading out on your home tour and writing any offers.
If you need help with a short sale on a buy side or you are in need of selling under a short sale process please contact Derrick at (612) 282-7653.
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