NJ Mortgage Consultants: The Short Sale

The housing industry continues to be an economic puzzle in which the pieces are still scattered across the nation’s living room coffee table. House sales have plummeted and foreclosures have hit record levels. As a result, new laws, regulations, and support programs practically emerge daily to try and remedy this crisis of colossal portion. To avoid completely annihilating one’s credit, more and more sellers trying to get out of their homes for one reason or another are turning to the option of a short sale. If you are a buyer now, reputable NJ mortgage consultants will guide you through the process of understanding what exactly this type of transaction entails.

NJ Mortgage Consultants: Definition of a Short Sale

A short sale is a sale of real estate that is less than the balance owed on the property’s remaining loan. This is often the result of a borrower who can no longer pay the mortgage on the property. As a result, the lender decides that the sale of the property at a moderate loss is way better than trying to squeeze the borrower into payment – or worse foreclosure. The reason a foreclosure is favorably avoided by both the lender and the seller is because foreclosures involve substantial fees for the lending institution and an absolute credit destroyer for the borrower/seller.

NJ Mortgage Consultants: Purchasing a Short Sale

First, direct your inquiry to trustworthy NJ mortgage consultants who can help you navigate this potentially tricky transaction. But here are a few things you should know first. Unlike a foreclosure, the bank does not own the property in a short sale, but they still have the ultimate and final say on the approval of the sale. The bank/lender has the approval power in this situation because it is the bank/lender, not the seller, who will be taking a loss on the property.

NJ Mortgage Consultants: Difference Between a Short Sale and Traditional Purchase

• The terms of a short sale contract are always subject to the mortgage lender’s approval. In a traditional transaction, the only party who would need to approve the sale is the seller.
• The contract should also state the property purchased is “as-is.” It is still possible for a buyer to include provisions within the deal that will permit them to back out if an inspection, for example, reveals substantial structural problems. However, do not expect the bank/lender to lower the price of the sale to accommodate repairs. Furthermore, the bank/lender is highly unlikely to make any necessary repairs and of coarse the seller, who probably has no expendable cash flow, is even less likely to facilitate repairs.

As stated, quality NJ mortgage consultants can help you understand this process more thoroughly.

NJ Mortgage Consultants: The Short Sale and the Waiting Game

When you make an offer on a short sale property, be prepared to wait. Banks/lenders are known for taking several months to respond to short sale offers. NJ mortgage consultants will usually recommend that you give the lender a deadline to reduce the wait time. This doesn’t always work, but it doesn’t hurt to ask. Nevertheless, it can take months regardless since the seller ultimately has to reach a short sale agreement with the lender.