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The Essence of Timing in a Short Sale Transaction

BY: Karl Hartley | Category: Finance | Submitted: 2010-11-10 18:13:49
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Article Summary: "Timing and duration are two essential factors to consider when entering a short sale purchase agreement for any house - whether you're selling your home through a short sale or buying one under these terms. Short sales can turn into a bloody process if you are not aware of what you're getting into. Know the ins and outs and why .."


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While there are specific resources required to complete a business transaction, there are 2 other very essential components which complete or mess up a deal. Timing and duration - two similarly important features of every business venture, they both can establish the direction at which a transaction is going.

Timing is relevant, in almost anything. That is the reason why you often hear others say "Strike the hammer while the iron is hot." Especially in business, there is an opportune moment in time to take action, and having the ability to distinguish this window is the attribute of every successful business person.

Duration is equally crucial in every business dealing or endeavor, as anyone involved in it has his own benefit to achieve. The longer it takes than usual for matters to take shape, the smaller the odds that it will take shape or survive. In any business transaction, duration is a definite period of time, usually in days, weeks or months, for a deal or agreement to be amicably reached by the parties involved.

Anyone in the United States by now must have learned about what a short sale transaction is - or maybe anyone attempting to buy or put a property in the market in the recent 2 to 3 years. In real estate, a short sale is described as the sale of a property that is facing imminent foreclosure, typically for an amount much lower than what is presently owed on the property. A short sale has become the hottest sector in the housing industry these days due to the distressing percentage of foreclosures, so it actually is an excellent time to buy a home for a bargain. It is an appropriate time to strike while the iron is hot.

When the market is on the rise, you wouldn't hear about short sales transpiring. When requirement for homes is more than what is available, properties get to sell for higher than what they are actually worth. But when available properties flood the market and there are less buyers looking to purchase homes, home values drop as a result of the law of supply and demand. People who own a mortgage normally end up paying more for the existing value of their home. Worse, as a result of the economic downturn, most borrowers are incapable of meeting their dues and have to cope with the risk of home foreclosure.

Lenders are in a worse state, ending up with an inventory of homes that does not earn any profit. So a short sale is the better option for them -some money for a house, though not enough to match was initially loaned, is better than none at all. Thatis exclusive of the cost it will take lenders for property upkeep and maintenance so the homes remain in good selling condition.

But short sales are not really that easy to do. It's not as short as the name suggests - the process is lengthier and the negotiations can become quite demanding. It is just the price that's really short. The number one step entails the homeowner or the borrower working on the numbers to prove to the lenders that a short sale will be the best way to go. They will have to prove that it will be a more favorable alternative to a foreclosure and lenders going the REO route.

Then, the owners will have to produce a concrete purchase offer from a competent buyer who is willing to wait and negotiate. Bear in mind that a short sale is already a loss from the lender's perspective, so the seller or his agent will have to convince the lender and obtain an approval. The procedures and negotiations can turn into a lengthy and arduous process and buyers will have the propensity to back out at any moment. Short sale transactions normally take thrice longer than a customary purchase transaction. So if it normally takes an average of 30 days to finalize a standard purchase, short sales can take as much as three to six months to complete.

That is why it is necessary to engage the services of a short sale expert who has the knack at working with timing and duration. Knowing the ins and outs of this distinct form of transaction gives them the advantage, just as it gives you better chances of finally getting a home for a lot less.

About Author / Additional Info:
For more expert advice on getting the best value for your first home purchase and to learn more about the short sale process, check out http://www.everyhomeinutah.com/fine/real/estate/shortsalebasics/custom.

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