How does a short sale work - Just Commission Advance

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How Does a Short Sale Work 5
Things to Know
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Short sales are an established option in the
world of real estate. While rarely the first
choice for those selling their homes, a short
sale can be a useful course of action in the
right circumstances.
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1. How does a short sale work? A short sale
occurs when, in simple terms, a homeowner sells a
piece of property to a buyer for less than the
total value remaining on the propertys mortgage.
This results in no money going to the owner.
Instead, as Investopedia pointed out, all of
those funds make their way to the financial
institution that owns the mortgage. In some
cases, this means the seller still owes money to
their lender and must repay it over an
agreed-upon time frame
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2. How long does it take for a short sale to go
through? While the specifics can vary greatly
from one case to the next, having an idea of how
long the short sale approval and sale process
generally takes is very beneficial. The Balance
assembled an average timeline of a short sale,
noting that the many steps of the process and the
time required to address them often add up to a
roughly three-month period between approval and
closing escrow.
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3. Why does the short sale purchase process
usually take longer than a regular purchase? The
term short sale refers to the deficit between
the sale price and the value remaining on the
mortgage not the length of time it takes to
complete the deal. A short sale property
requires that the seller and lender for the
sellers current mortgage take additional time to
document specifics and reach a mutually agreeable
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4. Does the seller still owe money after a short
sale? The answer to this question can change
from one situation to the next. In some
situations, a short sale will involve an
agreement between the seller and their lender.
That accord absolves the seller from an
obligation to pay the difference between the
homes sale price and the amount owed on the
mortgage. Laws in certain jurisdictions can
protect an owner engaging in the short sale of
their home from additional collection efforts by
a lender.
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5. What are the benefits of buying a short-sale
home? A short-sale home offers buyers who can
wait out the extended process an opportunity to
potentially purchase a home at less than its full
value. Careful review of appraisals and trends
within the area are always important, but a short
sale can present a valuable opportunity.
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