How Does A Short Sale Situation Arise In And Around Newburyport?
A Short Sale situation arises when the Seller owes more money on a property than it’s worth and can’ t sell the property without the bank’s assistance.
Each short sale tends to be a little different since each bank handles them a little differently. The basic idea is that the bank is agreeing to forgive the balance of the loan, and therefore has to agree with the sales price and they want as much as possible.
How Is A Short Sale Handled?
If the house has been on the market for 4 months or more and the price has been steadily reduced to what it is, that demonstrates to the bank that it isn’t worth more because it hasn’t had offers… but they don’t have to agree. You could make an offer for full asking and hear back a month or even three months later that they don’t think it’s enough. This is what the listing agent might tell me; a BPO is a short form of appraisal:
“John, the BPO has been done, I have an attorney working on the short sale. The present owners have done all the paper work. Need an offer to proceed.”
When an offer is submitted, the bank first has to agree that the seller has a hardship and there is a reason for them to agree to a short sale. In the past years many Realtors dealing with short sales where inexperienced and unsure how to successfully deal with the banks. This has been changing as Realtors like myself take the appropriate training and certification courses to handle these, and have the wisdom to bring a good professional negotiator or experience short sale attorney in to the transaction to work with the bank. In this case it appears the Realtor knows what she is doing and the seller will meet the requirements.
Often there is more than one bank involved, and neither will get all of the money they are owed. This of course complicates things and can slow or stop the process. For example, if the house is worth $250K, Bank A may hold a mortgage for $200,000 and Bank B may have given them a home equity loan for $100,000, leaving the seller owning $50,000 more than the house is worth. Bank A would appear to be covered, but Bank B does hold a lien on the property and if they don’t agree with the terms of the sale do not have to release the lien – so Bank B must be satisfied too!
Patience Is Needed
If you make an offer on a short sale property, I will include in the offer that you have the right to withdraw your offer at any time prior to the bank’s acceptance, so you aren’t tied to the house for three months and can continue to look. You must be patient – banks move slowly!
Are There Short Sales In Newburyport?
We see plenty of short sales in Amesbury, Merrimac, Salisbury, Rowley and other communities surrounding Newburyport. Because prices in Newburyport have not suffered as much, homes in Newburyport tend to not be in short sale situations, although it does happen. It is most common in communities that have seen real estate values suffer larger losses.