Well, good afternoon everybody. My name is Chris Berger and it’s time for Berger Point.
You know, people talk about buying foreclosures or buying a short sale.
So what exactly does that mean?
Well, pretty much everyone knows what a foreclosure is.
That’s something where the banks — who held a mortgage on the property — have the ability to collect that mortgage and foreclose on the property and title now belongs to the bank.
That’s very important because when a foreclosure happens and the bank has the title that means when you buy it you get a clear title.
Now, I wanted to tell you a little bit about a short sale because that’s the complicated one and that’s something you should be aware of.
When you are thinking about looking at a home that is in a short sale situation, chances are it will be listed and programmed in the MLS as being a short sale.
What does that mean?
Well, basically it means that the home homeowner owes more than what the home is worth.
For example, the homeowner owes $400,000 when the home is only worth $300,000.
Now that may seem drastic to you, but that’s actually happens.
So how is this remedied and how can you, as a buyer, go in and get this short sale?
Well, basically the bank will make arrangements with the homeowner and come up with a number that will cover the short sale and satisfy the bank and let the homeowner walk out free.
So what can that number be?.
Well, let’s go back to our original example.
The house, they owe $400,000. The house is worth $300,000 so the bank may settle on a home price of maybe you know $280,000.
So, as long as the bank gets that amount of money then they will proceed and give the new buyer a clear title —- and that’s the essence of a short sale.
Time Is Longer To Close
Very important — but again I can’t emphasize enough that as a buyer when you go in and you make an offer on a home — that’s in a short sale situation — it’s going to take longer to close on that property.
Generally, it only takes 60 days to close on a property once you’re in contract.
Well this — the short sale — may take up to four months!
So be aware of that. Be aware of the short sale. Look it up. Do your homework.
That’s my point!
Here we are approaching July and my grandson is right in the middle of a very competitive hockey tournament.
So, I wear this Jameson hat in his honor and go hockey!
