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SHORT SALE INFORMATION FOR HOME BUYERS in Maryland and Northern Virginia.
Homes for sale are listed in the Multiple List Service in the following categories:
Potential Short Sale
The property listed in the Multiple List Service will be in the categories of a Regular Sale, a Potential Short Sale, a Foreclosure or REO/Bank Owned property listing.
Regular Sales are just that, a home owner-seller has listed his home for sale. The contract price of the home should yield sufficient net proceeds for the seller to pay off the existing mortgage and any other liens that attach to the property.
Potential Short Sales represent home for sale whereby the owner owes more than the market value of the property. Since there are no net proceeds, the owner's mortgage company has agreed to consider accepting less than the amount that the owner owes.
For home buyers, the Contract of Sale is between the owner/seller and the buyer. However, since the seller's mortgage company is taking a loss on the sale, even if the property sells at full market value, the owner's mortgage company must approve the Contract of Sale.
Of interest to potential home buyers when considering purchasing a property that is listed as a Potential Short Sale, is that there is no time-line for the contract approval process by the seller's mortgage company. Since the seller's mortgage company is taking a loss, they control the process and these contracts often take from 3 month to over a year to be approved and close. Home buyers will have to weigh the risk that the seller's mortgage company will not approve the Contract of Sale or that the approval process may take several months.
Short Sale listings are known as Potential Short Sales because a transaction doesn't become a Short Sale until the bank agrees to accept less than it is owed for a property. Until then, it's a regular sale and the Contract of Sale is between the Buyer and the Seller.
Foreclosure or REO/Bank Owned, in the case of the Multiple List Service listings of homes for sale, are properties that have already been through the foreclosure process and the bank or mortgage company now owns the property and has listed it for sale. These property sales are written, negotiated and processed just as a regular home/owner would be.
Foreclosure listings may represent an opportunity for a home buyer to buy a home at less than market value because they are often in need of repairs. There is no home owner to make any repairs and the bank/owners do not generally make repairs.
STILL HAVE QUESTIONS?? Just call Lenn Harley, Broker for Homefinders.com, 800-711-7988 and we'll help.