We’re learning more and more about buying a home and have decided to avoid short sales. In case you didn’t know, and were wondering what exactly it is:
Fred owes $520,000 on his home, but he lost is job and is not going to be able to make payments. Since he bought high and prices are now low, his home is only worth $375,000. To avoid foreclosure, he’s gonna try to sell his him for $375,000 and ask that the bank accept the $375,000 as full payment of the loan, which obviously is ‘short’ of the full amount owed. The bank would lose $145,000 but it’s better than losing $520,000.
Jim offers $370,000 for the home. Fred might be ok with that but the bank has to decide if they’re going to accept $370,000 and this is where things get held up. We were told it takes an average of 30-90 days for a bank to decide if they’re going to accept it.
No thanks. We’ll pass.