Short Sale FAQ

If you’re thinking about buying or selling a short sale, chances are you’ll probably have questions. Below are some of the most commonly asked questions from both buyers and sellers.

Most Commonly Asked Questions for Sellers

Q. What Is a Short Sale and How Does it Work?

When you’re “upside down” (owe more than you have equity) on your house, a short sale is permission from the lender to sell the house and call it quits. For example, if your house is worth $130,000 and you owe $170,000, a short sale is when you get permission from the bank to sell for less than you owe and to have the loan be considered paid off.

Q. Do I Qualify for a Short Sale?

It depends. First, you have to be upside down on your house. Then you have to be able to prove that you’ve hit financial hardship and you’re not just trying to get out of an upside down loan because it’s convenient. Finally, you have to prove that it would cost the bank less money to short sell than to take your home to foreclosure. If you can meet all these requirements, then you’ll most likely qualify for a short sale.

Q. How does a short sale affect my credit?

The impact on your FICO is less significant than a foreclosure. You’ll qualify for a Fannie Mae backed loan within 2 years, instead of 5-7 years. On your credit report, a short sale is reported as a pre-foreclosure that was resolved. It looks much better than a foreclosure that was completed.

Most Commonly Asked Questions for Buyers

Q. How long does the short sell process take?

6-8 weeks for approval is considered a fast short sale. Short sales can take on average 3 to 6 months. It depends on how thoroughly and quickly the seller submits their documentation and how quickly the banks respond – which, unfortunately there’s not a lot you can do about.

Q. How much can I expect to save on a short sale?

Most short sales will result in savings of 15% to 35%. Sometimes even more, depending on the property.

Q. Who pays for repairs?

Short sales are usually in “as is” condition. Since the seller gets no money from the sale, and the banks couldn’t care less, which means there’s nobody to pay for repairs. If there’s mold, bad foundation, termite issues, etc. You’ll want to have an expert take a look before you decide if you want to purchase the short sale.

Q. Who Pays for the Realtor’s Commissions?

In a regular sale, the commissions come out of the purchase price. The money is taken out of what the seller is paid and given to the Realtor. Since the seller is paid nothing in this case, the lender basically pays for all the Realtor’s commissions.

Call one of our short sale agents at (480) 331-2832