Melbourne Area Blog

A word about short sales. These can be the most frustrating...

A short sale is when a lender agrees to accept less money than is owed on a loan. Generally, a borrower must be 90 days behind on mortgage payments before a lender will consider a "short sale" and the borrower must supply a hardship letter with explanation of why they are unable to meet the mortgage payments.

The lender will not commit to a price that they will accept for a short sale until they receive an offer. Therefore, with any short sale that is listed in the MLS there is no guarantee that the list price will be an acceptable price. Once an offer has been negotiated between buyer and seller it is sent to the lender for "lender approval". This can take anywhere from a few weeks to several months. This time lag is what is keeping inventory on the market for extended periods of time. Generally after 30 - 45 days the buyer will withdraw the offer and the listing stays on the market. When the lender responds to an offer, it is either to accept or decline the offer. There aren't any negotiations. Occasionally if declining the offer they may indicate what an acceptable price is.

Fannie Mae is testing a small pilot program in several counties surrounding Orlando and also in Phoenix AZ. The program streamlines the process by getting all of the research on the property along with the necessary clearances done in advance. Hopefully this program will cut the wait time from months to weeks or even days.

If lenders decide upfront how much they are willing to accept it would help move some of the inventory now on the market, stabilize home prices and boost consumer confidence.

Questions?

sandy@sandylegere.com