What is a Short Sale?
A Short Sale is a
transaction in which the seller’s proceeds are less than the amount necessary
to pay off liens secured by the
property. Examples of
such liens include, but are not limited to, mortgages, home equity lines of
credit, tax claims, home-
owners'
association/condominium fees, and legal judgments.
What parties are
involved in a short sale transaction?
A Short Sale may require
the approval of one or more third parties, unlike a traditional transaction
which only requires the
approval of the buyer
and seller. In a Short Sale, after the buyer and seller have agreed on the
terms of the Agreement of Sale,
the seller may need to
request the approval of the lender(s) or other lien holder(s) (“creditor(s)”).
What time frames does
one consider in a short sale transaction?
In a potential Short Sale,
creditors can take an extended period to respond to a Short Sale request. In
some cases, creditors
do not respond at all.
Delays in creditor approval can make it difficult to set a specific settlement
date.
Do you have negotiating
power when making an offer to buy a short sale?
Creditors do not have an
obligation to approve the terms of Buyer’s offer to the seller. Creditors may
add conditions or
restrictions in
accepting the offer. Common examples may include refusing to pay Buyer’s
closing costs or refusing to allow the seller to pay for
repairs requested by Buyer. A buyer and seller are under no obligation to accept
these conditions or restrictions from creditors, although failure to accept
them may result in termination of the Agreement.
Buyer should consider
making their offer contingent upon approval by creditors and should retain the
right to terminate at
a specified time in the
Short Sale process. Buyer is advised that a seller may elect to consider additional
offers from other buyers until Creditor approval is obtained.
It seems likely short sale will continue to dominate our Las Vegas market for some time to come
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