Dec 5, 2008 11:08 am US/Pacific
Short Sales Not Easy For Bay Area Home Buyers
SAN FRANCISCO (CBS 5) ―
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A home under foreclosure in Solano County
CBS
Foreclosures are at historic highs in California. Some homeowners are avoiding financial ruin through short sales.
A short sale is a transaction where the bank agrees to settle a home loan for less than the amount owed. The original buyer finds a seller, the house is sold for an amount agreed upon by the bank, and the original buyer walks away from the unpaid amount.
While this option can save credit ratings and expensive foreclosures for the bank, people we talked to said there is nothing short about a short sale.
Most of these sales involve more than one mortgage and real estate agents said that getting the lenders to agree on a price can take months.
"The banks do not act in a timely manner, " said Don Sabatini of Alta Vista Realty in San Jose. Sabatini has closed 30 short sale transactions over the past 2 years, and has seen the same number fall into foreclosure.
He said that the banks want to make sure that people who are seeking short sales are really in a hardship situation, and the paperwork can run up to a hundred pages long.
"The banks do not have the personnel available to handle the crush of business in this area" said East Bay based real estate agent Sarah Arnold.
But the banks might be changing their policies. Both Sabatini and Arnold have seen short sales fall into foreclosure, and sell for tens of thousand dollars less than the offers on the table for a short sale.
Experts said that buyers who are interested in a short sale property should choose an agent familiar with the process. They should also be prepared to wait longer than usual to find out whether their offer is accepted.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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