A short sale in Orange County, or anywhere, is when a homeowner puts their property on the market for sale and sells it for less than the amount they owe to their bank. You may ask…”How can this be possible”? Well this type of transaction, the Orange County Short Sale Process, has become very popular over the last few years and should still be here over the next few years.
When a homeowner is behind on their mortgage payments, heading toward foreclosure, filing for bankruptcy, or has any sort of financial or health related hardship that is holding them back from making their mortgage payments consistently and on time…they will and should attempt a short sale.
See, this short sale process is very extensive and thorough. It may take several months to complete. Think about it this way….Let say we use the following for our example:
Seller: Jon Doe
Bank: Bank of America (BofA)
Property address: 123 Front St.
Mortgage Balance: $500,000
Market Value: $300,000
Let’s say that Jon Doe lost his job and has no way of making his mortgage payments on time anymore, so he is heading towards foreclosure. An alternative to a foreclosure is a Short Sale, so once the property is placed on the market for sale and an offer is received, then the offer and the completed Short Sale package will be sent to the lender for review.
From here the bank looks at various items, including all of the seller’s financials to determine if he/she really does have a strong case for a Short Sale or not. In our example we said that our client owed $500,000 and let’s say that the offer that came to us was for $300,000. We would communicate with BofA in this situation and continue to provide to them whatever information they require. During this time an appraisal has also been done by the bank to see what price they would agree to sell this property for.
Once the bank has come to a final decision they will send us and the escrow company a Final Short Sale approval and we can then, close out the transaction just like any other deal.
Since the bank, BofA, would be taking a large loss on this property they have to take their time and review all the details of the short sale. This is a HUGE reason why short sales take as long as they do.
In the majority of cases a Short Sale is a much better solution for a struggling homeowner than letting the property Foreclose.