If you have not heard about short sales yet in this transitional market, here is a brief overview:
A short sale is when a homeowner sells the property for less than the current mortgage. For example if you purchased a home 3 years ago for $900,000 and based on the current market conditions you can only sell for $750,000, you are “selling short”. The terminology is similar to the stock market concept of selling stocks for less than they were purchased.
The concept is pretty basic, but the execution of short sales can be anything but. You the seller may be willing to walk away from the property, but in these scenarios, the banks holding the loan must also get involved and this is were it can get complicated. The banking institutions must approve the short sale before escrow can even begin. This approval process can be excruciatingly slow in some instances. I have seen some approvals take upwards of 8 months. 8 months is a long time and essentially by taking this much time, the buyers who initially came to the table have often long ago found something else and now you have a property that has been stagnating on the market for 8 months. Typically these properties sell for much less than they would have if the approval process was say 2 weeks instead of months.
Every bank seems to have a different process for dealing with short sales and honestly many really don’t have it down. One institution that has is down is Wachovia. They have streamlined the process and have the players in place to allow approvals for the short sale to occur even before the buyers come to the table. There is a local group, dedicated to short sales, and these transactions do not differ much from a “normal” transaction where the seller is not selling the property short. This local group will actually meet with the homeowner and determine if a short sale is even viable before coming to the marketplace. Not only does this save the homeowner a lot of time and headache is also ensures that any buyers that do come to the table will not likely walk away due to overly lengthy short sale approval process. This also helps in the marketing of the property from the Real Estate Agent view point. A short sale that can close in a typical escrow period is a short sale is a great marketing point for the property.
If you are in a situation where a short sale is your only viable option and you have a Wachovia loan, you are a step ahead of the competition.
