More and more short sale listings are coming online than ever before in the Portland market. Here’s a brief summary of what short sales are and what steps are involved in the process of buying a short sale house.

First, a short sale means that a seller owes more on their mortgage than what the house will sell for on the open market. Thus, to be able to transfer clear title to another party, the mortgage company has to agree to accept less of an amount of the debt owed to them.

To begin this lengthy process, the homeowner or seller must submit extensive documentation to the mortgage company showing all of their assets, liabilities and bank records, as well as hardship paperwork documenting the reasons why the homeowner must sell the property and why the homeowner wouldn’t be able to pay the difference in market value and price to make good on their loan. After reviewing all of this paperwork, the mortgage company doesn’t have to approve of the short sale and may not approve if they thought the homeowner had sufficient means to pay the debt off in full or sell the house at a higher price to accommodate the debt pay-off. This initial approval process can take as few as 2-3 weeks or as long as several months.

In the meantime, buyers can submit offers on the house to the seller. Unlike the standard real estate transaction where the seller can only accept one offer at a time; in a short sale the seller can accept numerous offers. An offer is not deemed to be truly accepted, and therefore go into sale pending status, until the mortgage company accepts one of the offers and agrees to forgive the portion of the debt which wouldn’t be covered by the sale. Again, the approval process for offers can take as few as a couple of weeks to as long as many months depending upon how backed-up the mortgage company is in their short sale/foreclosure departments.

Buyers who are on a time crunch for purchasing and moving to a new home are usually not good candidates for waiting out the short sale process since nobody can predict how long the mortgage company will take to respond to offers.

Once an offer has been accepted by the mortgage company, the transaction typically proceeds at a normal pace and in the standard subsequent steps of any other real estate transaction.

If you have questions about the short sale process or are interested in purchasing a house listed as short sale, please call me today for more information, 503-421-2407. I look forward to assisting you with all of your real estate needs!