What is a Short Sale? -The 3 Types of Homes for Sale in Today's Market
What exactly is a short sale and how does it differ from a bank owned? This is a question I get asked over and over again and how I like to explain it.
Just a few years ago when it came to buying a single family home there was mostly only one type, but with the recent downturn, there are 3 types of homes for sale in today's market or 3 ways homes are offered for sale.
1. Seller owned - Typical Sale (Also referred to as Regular Sale, Equity Sale, or Non-Short Sale and Non-REO) In this type of sale the seller usually has some equity in the home for the expenses of selling the home that include paying off the mortgage, commissions to the real estate agents, and closing costs or have other funds available to take care of these expenses and close the sale. With this type sale the seller is required to provide standard disclosures to the buyer. The buyer may negotiate with the seller for repairs if needed. Average escrow time on these run 30-45 days.
2. Seller owned - Short Sale. A short sale is where the seller owes more for their mortgage or mortgages than they can sell the house for. Though they are still the owner on title and sign all the documents and disclosures, the lenders must approve the sale amount and agree to the cover the expenses to close that the seller can not pay. The sellers typically don't have money for repair work. It can take up to 6 months or more to get the lender approval for the sale to proceed to escrow. Buyers must have extreme patience to wait and need to know that in some cases they may not get the lender approval needed. One more thing to keep in mind that all banks are different and each home even with the same lender may have different investors on the loan so no two are alike in timing, approval, etc. There is no rhyme or reason behind short sales. Average escrow time for a short sale once the approval has been received and the transaction moves into the escrow phase is 30-45 days.
3. Bank owned (Also referred to as REO or Foreclosures) The seller in this type home is a bank or asset manager for a bank. Most of these type homes are priced to sell quickly, many get multiple offers and sell for more than the listing price. The response time on a submitted offer is relatively quick - 3-4 days. The banks look for strong offers with few requests. The listing agents on these type properties tend to be extremely busy and the more listings they have the more patience it takes in getting answers from them. With this type home the seller (the bank) has not lived in the property so are exempt from the standard disclosures given to buyers. It is very important for the buyer to do their due diligence and have inspections done to satisfy themselves as to the condition of the home. Average escrow time on these run 30 days.
I am a REALTOR® in El Dorado Hills with Lyon Real Estate. Though living in El Dorado Hills is my passion, I am happy to help you with your real estate needs throughout the Sacramento Valley. For more information on me or our wonderful area visit my website at www.DeeDeeRiley.com or email me at firstname.lastname@example.org.
Please keep in mind -the views expressed herein are my personal views and do not necessarily reflect the views of Lyon Real Estate.
By DeeDee Riley 2011 *All Rights Reserved*What Is a Short Sale?- The 3 Types of Homes for Sale in Today's Market
DeeDee Riley - El Dorado Hills Realtor - Lyon Real Estate - CABRE#01499004
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