Short Sale

Can someone explain to me exactly what this means? I know it has something to do with the bank selling it for less than its worth, but is it a hassle to deal with? What if we have an FHA loan, that affects it, right?

TIA!

Re: Short Sale

A short sale occurs when the seller owes more on their mortgage loan than they can sell the house for, therefore, they will be "short" on what they owe the bank. The bank needs to approve the sale, because they are agreeing to take less than what they are owed.

The process is different because, in the usual situation, the buyer and the seller agree on the price, and that is that. With a short sale, the seller usually doesn't care what price they get, as long as they can get out, but then the bank must approve the sale. It can take awhile to get bank approval because the bank requires a lot of information. For example, the sellers need to provide a lot of financial information and show that they've suffered a hardship and can no longer afford the house.

It is also challenging because the banks are not forthcoming about what they will accept, so you never really know if an offer will be accepted until it is presented.

Some banks are easier to deal with than others, and it also is a much easier process if the listing agent knows what he/she is doing and collected a lot of info from the sellers upfront, knows how to deal with the bank, etc.

It shouldn't matter if you have an FHA loan or a conventional loan, but in my experience, once the bank approves a deal, they want to go to closing quickly (usually within 30 days). So you want to make sure you can close when you get the approval. FHA is a little more strict on the condition of the house (even in terms of minor things like handrails being installed, smoke detectors, etc.), but if the house is in good condition, you should be ok.

If a short sale has been vacant for awhile and needs extensive repairs, then it may not be mortgageable (through a regular FHA OR conventional loan) unless you get a rehab loan (203(k)).

Hope this clears things up a little. Feel free to contact me if I can help or if you have more questions!

Re: Short Sale

I think you misunderstood the question

If you are looking to do a short sale on your house and you have an FHA loan it IS different then a conventional loan short sale

there are different guidelines since the loan is a government loan

FM me and I will get your questions answered by the attorney on my short sale team- I have not personally done a FHA short sale and I do not want to give you misinformation