Northern Virginia Buyers & Sellers Ask: What is a Short Sale?
The Northern Virginia marketplace has changed since I first entered real estate in 2005. At that time, buyers could choose between new construction or a resale property. Very rarely did we hear about Foreclosures. Unknown to most was the Northern Virginia Short Sale.
A Northern Virginia Short Sale occurs when a home seller owes more than they will make for the sale of their home. For instance, if market value of a home is $350,000 and the seller owes $500,000, the mortgage company is being asked to forgive the $150,000 short fall. This short fall is where the term Short Sale comes from. It's certainly not from the length of time the sale takes.
Because a Northern Virginia Short Sale involves getting the Seller's Mortgage Company to approve the short fall, the entire sale is dependent on the mortgage company's "Third Party Approval." It can take anywhere from two weeks to four months just to get mortgage company approval from one lender. And Northern Virginia Short Sales often involve multiple loans on the Property that must approve the Short Sale. The good news is that as more and more banks are preferring Short Sales to Foreclosure, and increasing the staff to deal with them, the time lines have definitely shortened.
After approval, the Buyer will need to get a home inspection, appraisal and financing approval. Hopefully, the Buyer has waited and is ready to roll. Losing Buyers to the length of a time a Northern Virginia Short Sale can take is not at all uncommon, but completely avoidable with regular communication from the Listing Agent and insisting that the Buyer's Earnest Money be deposited at Ratification, NOT upon written evidence of Third Party Approval.
Surprisingly, a Northern Virginia Short Sale can be approved in writing by the mortgage company, and still not be considered approved by the terms of the Northern Virginia Regional Sales Contract. That being said, a Northern Virginia Short Sale doesn't have to meet the guidelines of Northern Virginia Regional Sales Contract's definition of approval to go to settlement. The Buyer and Seller must simply be willing to move forward with the terms of the approval given by the mortgage company in writing.
Northern Virginia Short Sales are time consuming and test the patience of the Seller and Buyer. It is ill advised to enter into a Northern Virginia Short Sale without a competent and experienced agent. Read more about good Northern Virginia Short Sale Listing Agents and good Northern Virginia Short Sale Buyer's Agents by clicking the appropriate link.