Can you negotiate repairs on a short sale?

Short sales operate according to the lender’s approval, requirements, and timeline. These properties are typically sold as-is, without the option to negotiate repairs, and as the buyer, you’re unlikely to get the seller and their lender to agree to cover your closing costs.

Are short sales bad for the buyer?

Short sales are a mixed bag for the buyer, the seller and the lender. If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. In a short sale, the proceeds from the transaction are less than the amount the seller needs to pay the mortgage debt and the costs of selling.

What’s the difference between a short sale and a sale?

A short sale is a voluntary process that happens when the homeowner sells the property for an amount that is far less than what is owed on the mortgage. So a homeowner may end up selling a home for $175,000 even though there’s still $200,000 on the mortgage.

Do you have to pay deficiency on short sale?

Once the short sale is approved and goes through, the lender receives the proceeds of the sale. However, the homeowner is still required to pay the deficiency—that is, whatever is left remaining on the loan.

Why are short sales considered to be risky?

Short sales are typically executed by investors who think the price of the stock being sold will decrease in the short term (such as a few months). It is important to understand that short sales are considered risky because if the stock price rises instead of declines, there is theoretically no limit to the investor’s possible loss.

When to return borrowed shares to short seller?

Short sellers can buy the borrowed shares and return them to the broker any time before they’re due. Returning the shares shields the short seller from any further price increases or decreases the stock may experience.

What happens in a short sale of a home?

A short sale occurs when a homeowner in dire financial trouble sells their home for less than they owe on the mortgage. The lender of the original mortgage gets all of the proceeds of the sale, and either forgives the difference or gets a deficiency judgment, which requires the original borrower to pay what’s left over.

Is there release of liability for a short sale?

Not every short sale approval letter contains a release of liability, and lawyers have said that the lender might retain whatever rights are available to pursue a deficiency judgment under federal and state law if the matter isn’t specifically addressed.

Can a bank collect the balance on a short sale?

The bank might retain a right to collect the outstanding mortgage balance without such a release—from the homeowner who was desperate enough to ask for short sale approval in the first place. A lender generally agrees to do a short sale because it’s more profitable than it is to foreclose.

Once the short sale is approved and goes through, the lender receives the proceeds of the sale. However, the homeowner is still required to pay the deficiency—that is, whatever is left remaining on the loan.