When a homeowner is no longer able to make payments on their home, or when a homeowner would like to sell their home, but they're underwater on their mortgage, a short sale becomes a viable option. Short sales can be complicated and can have a negative impact on a homeowner's credit report, however, there are upsides to short sales. A short sale can help a homeowner in financial distress, and can prevent foreclosure. If you're a homeowner struggling to make your mortgage payments, here's what you need to know about short sales.
What Is a Short Sale?
A short sale is what happens when a homeowner sells their home for less than they owe on the mortgage. In order to do this, the owner must get the approval of the lender, and must find a buyer willing to go through the process of purchasing a home from a bank. Short sales, while not ideal, are often seen as a better alternative to foreclosure.
Short sales often happen when a home has lost significant value since the property was purchased. This can happen in times of economic recession, and sometimes just happens because a neighborhood has declined.
Why Sell Your House As a Short Sale?
Although selling as a short sale can be a long and frustrating process, it's better than foreclosure. People who sell their home as a short sale may take a relatively small hit on their credit and recover quickly. People who foreclose on their property will see this on their credit score for many years to come.
Want to Sell as a Short Sale? Know the Steps
Homeowners who want to sell their home as a short sale must start by finding a real estate professional and listing their home for sale, just like they would under more normal circumstances. The home's short sale status must be included on the listing, so buyers know to expect a more complex purchase process.
Once the home is listed for sale, it can be shown to buyers. Often short sale homes have deferred maintenance, because the homeowner is in financial distress. However, staging is still important. Improving a home's curb appeal can make the home more attractive to buyers, and can prompt buyers to make fast offers. The real estate professional can advise the homeowner on the best way to fix up the house.
Once there's an offer from a buyer, the homeowner must give the offer to their mortgage holder. The bank must review the paperwork in order to approve or deny the offer. Many banks will take a long time go review this type of paperwork. During this time, the buyer and seller must wait.
The bank may accept or reject the offer. Some banks will negotiate. All of this can take a lot of time, and some buyers may not have the patience. However, many buyers go into the short sale process aware that it will take longer, and are prepared for the wait.
Once the bank has accepted an offer, the purchase process may proceed much like other purchase processes. Generally, short sale homes are sold as-is. Buyers have little power during the short-sale process, because banks are only willing to negotiate so much. In some ways, this can even simplify the home purchase process.
Are Buyers Attracted to Short Sales?
Short sale properties are generally sold at a discount compared to other homes in the neighborhood, and thus buyers seeking discount properties are often attracted to short sales.
Sometimes these buyers are investors who have time to navigate the complicated buying process that comes from purchasing a short sale. Other times, they're first-time home buyers who are living on a month-to-month apartment lease, and have time to wait for the right home. Still, sometimes finding the right buyer can take a while, so homeowners selling their house as a short sale should prepare for this wait.
Work With a Real Estate Professional
If you're thinking about selling your Central Saanich home as a short sale, you're going to need help from a capable real estate professional. It's best to work with a real estate professional who has clear understanding of the short sale process, and who has had experience helping other homeowners sell their home as a short sale.
Interview multiple real estate professionals until you meet the one who is right for you. The real estate agent you hire should be able to answer your questions, walk you through the short sale process, and suggest strategies for selling your home as quickly as possible. Contact real estate professionals in your area to get started today.
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The Neal Estate Team is your #1 source for all of your Victoria BC real estate needs. Get in touch with us online or by phone at (250) 386-8181 to speak with a Victoria real estate buying or selling expert today. With decades of experience as a top selling Victoria REALTOR® and ranked in top 1% globally with over 4,000 transactions and $1 Billion SOLD, Ron Neal & The Neal Estate Team have the industry experience and market knowledge to help you make smart and informed buying or selling decisions.