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What is a Short Sale?

September 19, 2009

A short sale is a transaction that involves selling a property for less than the amount owed on the mortgage.  It has grown in popularity as an exit strategy for financially strapped homeowners because it doesn’t hurt your credit report as deeply as a foreclosure.   It is also a favorable out for the mortgage company to utilize in that it is a quick way out of a bad loan.

The problem lies in that prospective buyers must have patience that short sales require.  The process from offer to closing can take upwards of 6 months and few buyers can afford to wait that long when extenuating circumstances influence decision making over potential dollar savings. It may too take up to 3 or 4 months to hear from the lender as to if they will accept your offer.  And if and when they do, you may have to close in as few as 10 days! From a prospective buyer’s standpoint, purchasing a short sale property can be preferable to a foreclosure because if the borrower stills owns the home, he or she is likely to take better care of it.

With so many distressed properties for sale in the Chicagoland area and other homes selling conventionally at drastically reduced prices, there’s a wealth of inventory available allowing buyers to get a quick yea or nay to their offer.  A few potential buyers will make multiple offers on multiple short sales or write the offers so they can walk away if a lender doesn’t respond within a certain time frame.  This is the catch when attempting a short sale: you must be dilegent and patient.

If you are a potential buyer looking into a short sale purchase, be prepared to utilize all your patience.  You can also forget using the $8000 federal tax credit towards a home purchase even if you’re looking a straight up transaction.

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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