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what exactly are they?? Looking around for second homes that we won't be living in full time for a few years.
I've seen many in Florida listed as "short sales"..would they work for someone who is not going to move into any time soon?
what exactly are they?? Looking around for second homes that we won't be living in full time for a few years.
I've seen many in Florida listed as "short sales"..would they work for someone who is not going to move into any time soon?
In a nutshell, a "short sale" is a transaction where the property is sold for less than what is owed on the property. For instance, Owner A has a mortgage with Lender G for $500,000. But, due to current market conditions, the maximum that Owner A can sell the property for is $450,000 - $50,000 LESS than what is owed.
Owner A goes to Lender G and asks the lender to take the 450K as full repayment for the loan - in essence, they ask the lender to "write off" or "forgive" the other $50,000.
I don't mean to make this sound like it is a "slam dunk" - for it is not. And, there are potential adverse tax consequences for Owner A (they may have to pay income tax on that $50,000 that was "forgiven") - not all lenders will go for this -
But, if you, as buyer are patient, you may be able to find a good property, at a price you are comfortable with - the reason for the patience is, it sometimes takes a while for the lender to make a decision to "forgive" or not - I have seen some take up to two + months.
Hope this gives you some idea what a "short sale" is.
As Greatday said, it can get alot more complicated than the above nutshell, but is a good overview of what a short sale is.
There are some deals to be found in short sale situations....but just because a home is being sold short sale doesn't mean it's a great deal. Banks are just like any other seller, they want to sell the home for as much as possible, and if they beleive an offer is too low they will not accept it. If the agent selling the shortsale is on top of things and keeping the bank informed of what's going on, a homeowner can on occasion stay in the home for MANY months without paying anything on the mortgage until the bank finally decides to foreclose. There is one agent in my office that has been going back and forth with the bank on a short sale for 9 months now.
You may also be interested at looking at REO properties.
As far as you a buyer is concerned, buying a short sale is like buying any other property, it will just take longer to get to closing if the offer is approved by the bank.
Ah yes. The infamous short sale in Florida. In my area it's screwing up the pricing and stats because we have associates listing these properties at 'made up' pricing and throwing them on the MLS. Just because it's listed at a particular price has NOTHING to do with the bank accepting that price. And the associates are covered because there is a disclaimer saying that the bank must accept it. So, be careful and make very sure you have a Realtor who know what they are doing.
But, to answer your question, yes, you can purchase a short sale and not live in it. You have to have proof of funds and eligibility for financing with generally a large down payment held in escrow by the title company of the bank's choice. Be prepared to have it be a long process and realize that the owner can at any time stop the process and bring the mortgage up to date and the bank can change their mind.
There is one in my area that was listed as short sale but was on it's way to being a sheriff's sale. The sale was last Friday, the owner is still living in it and my guess is that they are waiting to be evicted before moving out.
I looked at a few in my area using the yahoo real estate, there's a foreclosure option. Some of these houses do have for sale signs with an agency so people are able to walk them. It tells you how much is owed but the things is, is the price reflecting the current market? From what I can see on some, it is not and in fact some are going for more then what they would normally sell for due to the owners taking out HELOC or what ever.
IMO, you really need to research. You have to figure out if buying a home up for sale is better then trying short sale or one going for sheriffs sale.
One gal had her eye on a sheriffs sale only to have the bank not release it or something to that effect. She's been watching this property a good 9 months already
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