When is a "Short Sale Offer" Accepted?
August 19, 2009
Short sales have indeed been a bug-a-boo in this real estate market. Due to the high prices that homes were commanding 3 to 5 years ago and due to the availability of 100% financing, many homeowners have found themselves with loans greater than the present value of their homes. For personal reasons and sometimes to sell to avoid a foreclosure, sellers have offered their properties for sale at prices less than the amount owed to their lender. This creates a need for the lender to agree to accept less than the full debt owed in order that a property can be sold.
Thus a property is offered for sale at $350,000, but the mortgage is $400,000. The seller accepts an offer contingent on approval of the lender to take a lesser amount to satisfy the debt.
Lenders have been incredibly slow to respond even though the short sale process has been in play for at least 2 years. Often from the time the seller "accepts" the offer from a buyer until the lender "accepts" or "declines" the short pay-off can be 3 to 6 months. During this time, the buyer has an accepted offer since the seller has accepted it and the seller is still the owner of record. However, there is an outstanding contingency. Not that the buyer obtain financing, but rather that the seller obtain approval of the short pay-off.
Many multiple listing services require that the pending sale be reported either in the pending category or in a back-up category. Any other offers the the seller might receive would be in a back-up position since the seller is already under contract to a buyer. Complicated, isn't it?
The federal government has recently added an element to its "Making Homes Affordable Program" that is designed for "a quick private sale or voluntary transfer of property..."The expectation is that the new procedures will permit sellers, buyers and lenders to complete the sale of underwater homes in a more timely manner so that when a buyer's offer to purchase is accepted by the seller, the contingency on loan pay-off reduction will be removed in a timely manner.
Short sales have indeed been a bug-a-boo in this real estate market. Due to the high prices that homes were commanding 3 to 5 years ago and due to the availability of 100% financing, many homeowners have found themselves with loans greater than the present value of their homes. For personal reasons and sometimes to sell to avoid a foreclosure, sellers have offered their properties for sale at prices less than the amount owed to their lender. This creates a need for the lender to agree to accept less than the full debt owed in order that a property can be sold.
Thus a property is offered for sale at $350,000, but the mortgage is $400,000. The seller accepts an offer contingent on approval of the lender to take a lesser amount to satisfy the debt.
Lenders have been incredibly slow to respond even though the short sale process has been in play for at least 2 years. Often from the time the seller "accepts" the offer from a buyer until the lender "accepts" or "declines" the short pay-off can be 3 to 6 months. During this time, the buyer has an accepted offer since the seller has accepted it and the seller is still the owner of record. However, there is an outstanding contingency. Not that the buyer obtain financing, but rather that the seller obtain approval of the short pay-off.
Many multiple listing services require that the pending sale be reported either in the pending category or in a back-up category. Any other offers the the seller might receive would be in a back-up position since the seller is already under contract to a buyer. Complicated, isn't it?
The federal government has recently added an element to its "Making Homes Affordable Program" that is designed for "a quick private sale or voluntary transfer of property..."The expectation is that the new procedures will permit sellers, buyers and lenders to complete the sale of underwater homes in a more timely manner so that when a buyer's offer to purchase is accepted by the seller, the contingency on loan pay-off reduction will be removed in a timely manner.
posted by shirley harry at 9:13 AM
1 Comments:
Buyers must do thorough research on some info about short sale for lenders may not disclose all necessary details. There maybe some delay on the approval process due to the condition of the documents.
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