With the downturn in the Redding & Shasta County real estate market, many homeowners are not able to sell their home for what they owe. Parsons Realty specializes in short sales and we’ve been able to successfully help home owners in the Redding area short sale their homes.
What is a Short Sale?
A short sale is when a borrower sells their home for less than what is owed to the lender. In most cases the lender agrees to accept the reduced dollar amount as payment in full and the borrower will no longer owe their lender anything.
The Short Sale is basically the same as any other real estate transaction except it requires approval from the sellers lender. In order to get the lenders approval, a short sale package will need to be submitted to the lender. You can get the short sale package from your lender or see our blog post “What’s In A Short Sale Package? “ this post includes a check list of documents that most lenders require. The main component in the short sale package is the purchase contract and a settlement statement, these documents show the lender what dollar amount they will be receiving from the short sale.
Once the lender receives your short sale package and the offer, they will assign your file to a negotiator and order an appraisal or a Broker Price Opinion a.k.a. BPO to determine the fair market value. The appraisal/BPO will determine what price the lender is willing to accept for a short sale. Most of the time the bank will be willing to fluctuate a few percentage points but they are going to want to see an offer close to fair market value.
What happens if there is more than one lender?
If there is more than one loan secured to the property then all existing lien holders will need to agree to the short sale. Typically the first mortgage will agree to offer a portion of their proceeds to any junior mortgages to have them release their lien and allow the short sale to close. In some cases the junior lenders will settle for just a few thousand dollars.
Each short sale is different and they can be fairly complicated transactions. Depending on the type of loan you have and your financial situation you could have possible tax & legal ramifications.
For more detailed information about short sales or to have one of our short sale experts contact you to discuss your options, please fill out the form below.