What’s a Short Sale? Can I Find One in Katy?
Many Katy Realtors still do not understand the process of a Short Sale even though there are many such properties in Katy. What does it take to get a get a Short Sale written and closed? Acquaint yourself with the basics by reading this article and call me at 713-818-2404; I am an expert in the field of Short Sales!
Let’s start at the beginning, what is a “Short Sale”. A Short Sale is where the net proceeds from the sale of a property are less than what is owed to mortgage companies and other lienholders. The seller receives no funds from the sale and all lienholders must agree to the transaction.
The seller’s best interest is served by having any sale approved by the mortgage company. Although the seller’s credit is adversely affected, they do not have a foreclosure on their record.
The mortgage company tries to get the highest amount they can in order to reduce their loss on the transaction . This involves a negotiation process which can take quite some time. As a general rule, these transactions will take a minimum of 30 days to complete but, depending on the circumstances, can take 90 days or more. All parties involved in the transaction need to be aware of the possible time frame involved.
Because the mortgage company is taking a loss on the transaction, they control a lot of the specifics of the sale, including, but not limited to, what can/can’t be included in the contract and when closing/funding must occur.
Following are the usual stipulations tied to a Katy Short Sale:
- Any contract submitted is subject to acceptance by all mortgage companies and lienholders. It is not considered executed until all approvals are received, even though the seller will sign the contract in order to submit it to the mortgage company. The Special Provisions section of the sales contract will include verbiage similar to this: “This contract is subject to acceptance of seller’s mortgage companies and lienholders.”
- All offers must include a lending pre-approval letter.
- The seller will not be able to do any repairs to the property. The sale is “as-is, where-is”. (Note: This not always true. It depends on how many offers are on the property which is usually multiple.)
- Seller is not in the position to provide Homeowner’s Association documents. If buyer requires the documents a part of evaluating the purchase of the property, buyer will need to order and pay for them.
- Mortgage companies generally will not pay for surveys, inspections, treatments or residential service contracts. Depending on the offer and the amount they will receive, the mortgage company may or may not allow some seller contributions to buyers closing costs.
- When and if the mortgage company accepts an offer, they will have a specific date for closing/funding. These dates are generally firm and while it may be possible to get an extension, there is no guaranty an extension will be granted.
- There is no guarantee that any offer submitted by a buyer will be accepted by the bank.
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