Pro: Getting the property for less than what it would cost for the owner to reinstate the mortgage can be a windfall for the buyer.
Con: Short sales can require more work on the part of the buyer who must also qualify for the transaction -- and often be able to pay entirely in cash.
Did you know?
Fannie Mae and Freddie Mac will accept 85 to 90 percent of the fair market values in a short sale, and HUD will accept as low as 82 percent.To make a case for the short sale, the buyer needs to compile paperwork to prove to the lender that the homeowner qualifies for a short sale payoff.
While a first mortgage will be satisfied in a short sale, buyers also need to consider any secondary liens against the property.
Lenders will more seriously consider short sale offers that are entirely in cash, with a 30-day-or-shorter closing and no contingencies.
The seller or property owner cannot profit from a short sale.
What goes in a short sale packet?
Since the average layperson is not familiar with the many nuances and legalities of most real estate transactions, including short sales, working with a Realtor or Lawyer who specializes in this area can save prospective buyers a lot of aggravation, time and money. i advise that you seek professional help in the Short Sale process.
Example of a short sale.
A homeowner, who is facing foreclosure, has an existing first mortgage of $300,000. You write an offer to the lender for $220,000, which is accepted as full payment for the loan."