Short Sale Questions

4 Replies

Aloha Hawaii Property Investors,

Can a home owner (in Pre-foreclosure) talk to his/her bank and get a Short Sale price from them, then sell it at that price?

Can the home owner sell at this Short Sale price to a Buyer on terms?  Or does it have to be sold lump sum to cash bank out?

Thank you in advance,

Mike

Usually, you can get a short sale pre-approval price for an FHA insured home. The price will be 95% of the bank appraisal for offers in the first 30 days, 90% for offers in the next 30 days, and 85% for offers received more than 60 days after approval.

You can also get short sale pre-approval for some other types of loans.  Call the servicing company and ask them if that option is available for your loan.

The sale has to be cash, unless your lender is a local or regional bank that still owns the loan in its own portfolio.

Typically banks will not set a short sale price without having it listed by a realtor, getting an offer and ordering an appraisal. So doubtful an owner could get a price from the bank without having done these things first. 

What do you mean by "on terms"? Like seller financing?? NO

The bank requires buyer's proof of cash funds and/or loan preapproval to close the short sale.

Also, a short seller cannot receive any cash proceeds from a bank-approved short sale. 

They could "seller finance" the sale to an unsuspecting buyer who was not smart enough to run a title report and see they're in foreclosure. There's a lady here on Maui running that scam, just takes folks' money and doesn't pay the mortgage. But this will never result in the successful close of a short sale. 

@Loren Clive , thank you.  Question, if the default gets cured and foreclosure is cancelled ... Could a they sell their house with a Mortgage on it on Seller Financing?

Your perspective is appreciated.

Thank you in advance.

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