Carmichael Short Sale

As a Realtor in the year 2011 (and 2007-2010) I know more then I ever wanted to know about short sales. I will not bore all of you with the details, but give you the broad stroke ideas of what a short sale is and how they work and then get to the point of this post.

A short sale is when someone owns a home, has a hardship (loss of job, divorce, etc.) and owes more on the mortgage then the house will currently sell for. A short sale means the bank that owns the mortgage is willing to accept less money then they lended on a house. For example, a person buys a home in 2005 for $425,000 with 100% financing, meaning they borrowed $425,00 plus any closing costs. In this example the person pays their mortgage for 5 years bringing their mortgage down to $400,000 (just using round numbers for sake of ease of understanding). This person then loses their job and can no longer afford the monthly payment. Historically, this person can sell their home for more then they owe and can make a profit. However, today home prices have dropped so significantly that this person is now forced to sell their home at a loss. As well, because this person does not have money to cover a loss they ask the bank to accept the loss. If in this example the home is now worth $200,000 (which is about right given the drop in home prices) the bank is accepting a loss of $200,000. With that said, this process takes a long time (typically 6-12 months, but can take much longer) and is what is making the current Sacramento real estate market so slow and holding back prices from going up (as well as many other things, but short sales are not fun at all).

With that said there are two great days when listing a short sale. The best day is when you receive an approval letter (when the bank tells you IN WRITING that they are accepting a specific price for a home). The second best day is when a BPO (Broker Price Opinion) is ordered. A BPO is when a Realtor in the area gives the bank a quote on what the home is worth today. Basically it’s an appraisal without paying an appraiser $400 to do it, but to pay a Realtor $75. The reason I bring this up today is my listing (found here: received a BPO today. So *knock on wood* I will know what the bank is looking for by the end of the week. Once we have the BPO we are looking at approximately 2-3 months to closing (on average, it can be shorter or longer), which is when the house actually changes hands.

So, after writing this post I realize that I will have to do a whole post (probably broken down into 2-3 separate posts) on short sales. If there are any topics of real estate you are interested in me writing about or just have questions about real estate please feel free to leave a comment or send me an email


About nickseevers

A Sacramento, CA Real Estate Agent at Triple Crown Realty who loves college football and politics.
This entry was posted in Carmichael, Real Estate, Sacramento, Seller, Short Sale. Bookmark the permalink.

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