The ‘Short’ in ‘Short Sale’ Does Not Refer to the Time
Posted By Victoria Boss Vero Beach Realtor || 21-Aug-2014
Short sale is a sale of real estate in which the proceeds from selling the property is less than the amount owed. In foreclosures, the title and ownership of the house is with the bank and it has the authority to make decisions. However, in short sales the ownership is with the individual and the sale proceeds of the house are found to be insufficient to satisfy the mortgage amount.
People tend to associate the term “short” for the time taken for the process to complete. However, this is a misconception; the term is used with respect to the reduction in amount as compared to the actual amount owed. In short sales, the home sale’s proceeds are less than the debt amount owed. The mortgage company agrees to accept a reduced amount.
The time required for a short sale is case specific. The bank requires about three months to act on the offer. In case no negotiations are involved, the case can be wrapped up early. Otherwise, the negotiations can take longer to settle.
Every short sale is not troublesome. Shorts sales can be affordable and beneficial sometimes. The homeowner should be careful to reserve the right to cancel the purchase agreement in case they find something else; not to deposit earnest money; not to proceed with inspections until the bank approves the short sale. The owner has to be careful if the short sale process time stretches than expected. Sometimes, the process may prove favorable to the homeowner and can work out faster than expected.