Fifteen years ago we helped two young men purchase the house above as a short sale (the small, snowy picture in the lower left corner). They waited exactly 5 months for short sale approval… a long time, and the house was a mess when they closed.
After closing I asked them whether it was worth the wait… they said to ask them later. I think now, 15 years later, the answer is yes! A lot happened in the meantime, including both of them getting married and only one staying in the house… and a fire forcing a complete remodel. Their house was part of the MSP Remodelers Showcase last weekend and the transformation was stunning.
Wondering what a short sale is? They were very common after the crash in 2008, not many any more.
A short sale occurs when the amount owed on a property is more than it is worth and the homeowner is not able to pay off the mortgage(s) when the property is sold. The homeowner negotiates with the bank(s) holding the mortgage(s) to accept less than the full balance of the loan(s) at closing, selling ‘short’ of the total value of the mortgage(s).
For sellers to qualify for a short sale, all of three of these circumstances had to occur…
- Financial hardship – a situation causing trouble affording the mortgage
- Monthly income shortfall – financials demonstrating the mortgage is unaffordable
- Insolvency – insufficient liquid assets to pay down the mortgage
While short sales reflect short funds, they do not usually reflect a short time frame. It typically takes at least 60-90 days for short sale approval from the bank holding the mortgage on the property… often longer when more than one mortgage is involved.
Some people were expecting short sales to return after the pandemic but the sharp increase in prices due to the inventory shortage have given homeowners enough equity to avoid short sales. Hopefully it stays that way.
Sharlene Hensrud, RE/MAX Results – firstname.lastname@example.org