What are Short Sale Homes?

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What are Short Sale Homes?

A short sale home is a home that is put up for sale by the owner with the condition that the proceeds might be less than what is owed on their mortgage loan. This type of sale is not so much for profit as it is a way for the person to deal with a current mortgage default situation. Rather than face a lengthy and costly foreclosure proceeding, the homeowner might simply conduct a short sale, absorb a few losses from the sale, and move on to a different residence.

Because of the pressure to sell the home in a short period of time, short sale homes can sometimes be very favorable for investors. Due to this characteristic of short sale homes, many issues can often arise when it comes to the pricing of such homes.

How are Short Sale Homes Evaluated for Price?

Since the lender holds an interest in the home sale, they are often fairly involved in the sales process, particular with regards to the pricing aspect of the home. Most lenders will use a "BPO," or broker price opinion (sometimes also called a best price offer analysis). This is an analysis conducted by the lender to review factors such as the age of the home, its location, and whether any renovations were done to the house. They will also analyze surrounding factors such as previous offers on the house, as well as the fair market values and going rates for homes in the area.

One problem with a BPO is that it is conducted entirely on the lender’s terms, using their forms and their own calculation process. This process is different from an appraisal, which is conducted by a professional appraiser who must conform to various state and local real estate standards. In the event of a dispute, hiring an appraiser may be an option, although the appraisal process can sometimes take a long time.

What if I Have a Dispute Regarding a Short Sale Home?

A common legal issue involved with some short sale homes is that of fraud. Short sale fraud can occur through the use of fraudulent documents and other types of techniques. As mentioned, pricing can often be an issue, so you should be suspicious any figures that seem overinflated or out of place.

If you have a dispute regarding a short sale home, you may wish to present your own documents and research if you have any. This can include your own evaluations of market prices in the area, as well any contracts or legal documents in your possession. These can be used as evidence during court sessions.

Should I Hire a Lawyer for Help with Short Sale Homes?

If you’re interested in purchasing a short sale home, or if you need to conduct a short sale, you may wish to hire a lawyer for assistance. Your attorney can provide you with the legal counsel and guidance that is needed to accomplish your objectives. Also, your lawyer can keep you updated if there are any changes to the real estate laws in your region.

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Last Modified: 08-03-2015 11:08 AM PDT

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