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Why is a "Short Sale" called a "Short Sale" when it takes so long?

Why does a "short sale" take so long and why do they call it a "short sale"?

The short sale is when a the seller owes more on the home than the current market value.  The Bank/Mortgage Company is then asked to accept the loss.  The lender must then figure out what market value would be, and then consider if it is willing to accept the loss.   To the seller and the buyer, a short sale looks more like a "long sale".  What takes so long?

The Charlotte Real Estate market is experiencing some short sales.  Charlotte area Short Sales can provide a great opportunity to the right buyer. 

Most home loans are actually sold off to investors.  This is known as the Secondary Market.  The mortgage company that you make the payment often only "services the loan" (accepts payment and then forwards your payment to the real owner of the loan).  The lender, that "sold" the loan to someone else, must then make the case to the investor of why they are better off absorbing the loss.

It takes time for the Mortgage Company to build a case to present to the investor.  The Mortgage Company must justify the short sale.  Why should "you" the investor accept thousands less than you actually were contractually promised?  What is the risk of foreclosure?  How much could you expect with a foreclosure?  Is it better or worse than what is offered?

After the investor accepts or declines the short sale, the mortgage company provides the response.  At this point, typically about four months after the buyer initially made the offer, the mortgage accepts, declines or counters your short sale offer.  At this point, the lender expects you to close within 45 days of their notice. 

This is difficult for many buyers.  Most buyers are ready to move within 30 days or so.  Waiting four months for a reply to their offer is more than many are willing to entertain.  great things come to those who wait.  A short sale buyer must "love" the home and be getting a great deal.  If it is not "the perfect" home at the "perfect price" you will likely get tired of waiting and find another home that is equally attractive.

Short Sales will continue to be a reality in the real estate market for years to come.  You evaluate every situation, consider all options and decide what is best for you and yours.  Charlotte Real Estate Short Sales has many fantastic deals.  Every home is considered individually.  Were there simply too many homes in this price range for the area to support?  Is the neighborhood declining?  Are the fundamental economics strong enough for a reasonable rebound?  Is it destined to fall further?  The fundamentals are location, location, location.  This includes schools, property taxes, commute times, nearby conveniences, amenities and much more.

If you are considering a Charlotte Foreclosure or Charlotte area Short Sales, either buying or selling, give me a call and I will share the options and will do what ever is best for your specific situation.

Published Saturday, July 16, 2011 8:05 PM by Rick Waite

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