Since 2007, Joseph Zoppo has served as a real estate broker with Colonial Properties, LLC. There, Joseph Zoppo facilitates a number of different types of real estate transactions, including short sales.
In the real estate market, a short sale occurs when a mortgage lender agrees to sell a property for less than is due on the mortgage. This type of sale takes place when the homeowner can no longer make payments and needs to vacate the property yet at the same time wishes to avoid the impact of foreclosure on his or her credit rating.
For a short sale to occur, however, the seller must secure approval from his or her mortgage lender. Such agreement typically happens only when the seller lacks the equity to pay the difference between the buyer's offer and the total owed. Securing approval is a challenge when the property owner holds two mortgages, as the second lender is likely to agree to the sale only if the offer benefits it in some way.
Lenders most often require an earnest money deposit, which serves as an expression of good faith and serious intent to purchase the property. The lender is also likely to request proof of available funds and a mortgage preapproval letter in order to confirm that the buyer is able to fulfill the obligations of the purchase. In some cases, the lender will request an increase in the purchase price after viewing this information.
Experts recommend that the buyer specify an offer contingent on lender acceptance. Receiving notice of acceptance may take up to a few months. If the buyer has time constraints, he or she may include in the offer the intent to cancel if the lender has not accepted after a certain period.
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