A short sale in real estate is when an homeowner owes more on their home than the property is worth, and they get permission from their bank to sell the property at a loss in order to avoid foreclosure.
Short sales are a great way to get a property for a discount, but the downside is that the process takes longer. The shortest short sale closing I experienced last year was about four months, from contract to closing. The longest I had last year was almost seven months. Usually, short sales take at least three months to close.
Can You Get a Short Sale in Real Estate for Under List Price?
Yes, sometimes it’s possible to get a short sale for a price that is even considerably lower than list price. However, it really just depends on a variety of factors, including how well the property is priced compared to recent comparable sales in the area. Sometimes, a listing agent has priced a property higher than they know they should be pricing it because they have to be able to demonstrate to the seller’s lender (who is losing money on the deal) that they’re doing the best they can to get as high a price as possible. Sometimes, however, a list price is higher because the seller is so deeply underwater on the home with what they owe their bank. It just depends.
At the end of the day, regardless of whether or not you offer list price or lower, the seller’s bank has to approve the sale. If they feel the price being offered is too low, they won’t issue their approval on the sale and instead will make a counter offer at a higher price. If you don't like the higher price, you can walk away from the sale. The challenge is that the bank’s decision process regarding approval on a short sale in real estate can a long time, sometimes just 2 to 3 months, but often longer. That’s why the closing periods for short sales take so much more time than standard sales.
Are you interested in finding out more about how a short sale in real estate works? Email me at DarrenRobertsonHomes@gmail.com for a free list of short sales for sale in the area of your choice!