Short Sales in Charleston
If you are looking for a home and have not heard about short sales yet, you will. Short sales have been around for quite some time but have not been well publicized until recently. Short sales can be interesting and dynamic; yet, they are usually frustrating for buyers. For a buyer who has the patience and is in a position to wait, a short sale can be a very good financial opportunity.
What is a short sale? A short sale is simply a situation where a home owner is in a position whe
re they need to sell their home but their home is currently worth less than what they owe on their mortgage or mortgages. In addition, the sellers have demonstrated some degree of financial hardship to their lender in order to secure their lenders blessing in allowing the short sale. The sellers lender has agreed to work with the seller by sharing some or all of the loss resulting from having to sell the home for less than what is currently owed.
It sounds very simple yet it can be complex and convoluted. Most short sale situations take much longer to complete than ordinary sales. Buyers who are considering purchasing short sale properties need to be prepared to be very patient and they need to expect uncertainty during the process.
Banks are willing to do short sales for one reason - it saves them money. A short sale is usually more financially prudent for a mortgage holder than a foreclosure. Banks use loss mitigation departments to manage these transactions. These loss mitigation people are well known for their lack of flexibility and for their lack of compassion. They are also known for their lack of communication to all parties involved in these transactions.
For the seller who has realized the need to sell short, the first step is to speak with the lender and to submit a package explaining the reasons for not being able to meet their mortgage payment obligations. Their lender will review this information and make a determination as to whether or not the lender will be willing to allow the short sale. If the lender does agree, the seller is free to market the property as a short sale. Any sales contract will be subject to a third party (bank) approval. That is, once the buyer and the seller have come to a meeting of minds by completing a contract for sale, the mortgage holder has the final say so on the deal. Why? Because the mortgage holder will share in the loss. If there is more than one mortgage holder involved, such is the case when there is a second mortgage, all mortgage holders will need to approve the terms of the short sale.
It's important to note that the price listed on the MLS as an asking price is usually just a best estimate by the seller and the seller's agent as to the value that the current lender will be willing to approve. This means that an offer for full asking price based on the MLS will not necessarily be accepted by the current lender. 
Most buyers are under the impression that the MLS listing price for a short sale is always significantly higher than the bottom line of what the current lender will accept. Unfortunately this is simply not the case. Although there are cases where the buyer can get a dramatic reduction, such a dramatic drop in price should not be considered a foregone conclusion simply because it's a short sale. This is because the list price may already be in line with the minimum that the mortgage company will accept.
Once an offer has been accepted by the seller, the current mortgage holder usually employs an appraiser to generate a current appraisal on the property. That appraisal is submitted to a negotiator for the bank. At this point in the process the current mortgage holding bank determines whether or not to accept the offer, reject the offer, or provide a counteroffer.
With the large number of short sales on the market today, lending institutions are often overwhelmed with requests to participate in short sales for properties within their mortgage portfolios. These lenders have difficulty acting quickly because of the backlog of short sale properties. It is not unusual for it to take more than 60 days to receive an answer from a bank on an offer. It is not unusual for it to take up to six months to close a short sale deal. It is commonplace for buyers to feel like their offer has disappeared into a black hole because they have to wait so long to get information.
If you decide to go the route of purchasing a short sale, you may be able to get a property at an excellent value. Before you say "yes" to the idea, ask yourself whether not you are willing to:
Wait 60 days or more for an answer to your offer
Wait six months or more to close on the property
Tolerate long periods of no information from the selling agent or from the current mortgage company
Accept that most short sale properties will be "as is" and that the seller is not usually in a position to make very many repairs to the property if any at all
Accept that most short sale properties, as with foreclosed properties, may not have been maintained very well recently because the sellers are trying to cut their losses as much as possible and the sellers may have run into financial difficulties that have prevented them from proper maintenance and upkeep.
Understand that if you have a real estate agent working for you, that agent will be kept in the dark as much as you will be. Most agents who work with buyers on securing these properties do their very best to keep clients informed. If you are purchasing a short sale, be kind to your real estate agent. Short sales are some of the most difficult and time consuming transactions that real estate agents engage in. A good buyer's agent will do all that is possible to keep you informed; even so, if you are buying a short sale property, the information available to your agent will be extremely limited during the process. Your patience will help your agent be successful on your behalf and help you remain best of friends!