Underwater Mortages

Underwater Mortages

The main distinction between a regular sale and a Short Sale is that home owners will be able to pay off all the loans and commission with the proceeds of the home sale.   However, in a Short Sale, the lenders involved would have to approved the sale since they are not getting paid in full.  So the Short Sale process for a San Jose home owner is different because the Short Sale has certain restrictions imposed by the lender.

But before we explore the difference between a regular purchase and a Short Sale purchase  we need to ask ourselves, What is a Short Sale?!   In a San Jose Short Sale there will be limitation on who can buy your home. since the lender require an “arms length transaction” which means buyer and sellers are not affiliated by commerce, marriage, family or association of any kind.  There are also other entities and people involved in a San Jose Short Sale transaction who are identified below: 

1) Negotiator:   This is typically an Asset Manager at the bank who will review and process your Short Sale information packet prior to approval.   This person will also order a Broker Price Opinion(BPO) which will be the starting point for your negotiations and will determine the approved Listing Price.

2) Short Sale BPO Broker/Agent:  This is the broker/agent retained by the banks or an Asset Management to develop and generate this BPO or an appraisal.   It’s smart to make sure you meet this person onsite and make sure he’s not an out-of-area agent who is unaware of the local market dynamics.  

3) Short Sale Negotiator for Sellers: Typically the Listing agent represents this role in this Short Sale Buying process.  However, there are 3rd party companies that the Seller and the Listing agent could retain for a FEE to help them negotiate with the Bank.

Depending on the strength of the team representing the Sellers and their knowledge of the market, Short Sale process can be smooth or a disaster.   But it’s smart to obtain your own Home Value from a broker before you write an offer.

Despite the appearance of complexity, short Sale requires several additional forms to be filled out by the seller.   And if you hire the right Short Sale Agent or Short Sale broker for your San Jose property, you should be in shape to take advantage of the Short Sale Cash Incentives that some banks are now offering tax free in 2013.  
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