Short Sales In New Jersey – What are they? And Typically ANYTHING from

Coming from experience working with 4 short sales thus far in the past year, results will vary depending on the bank, those working the short sale including the listing agent, the specific property, and the price in which you are trying to acquire it at (along with several other factors I cannot think about now). Overall, it is a lengthy process so be prepared to wait and if this will be your first property using an FHA loan or VA loan, I emphasize, BE PREPARED TO WAIT as it is the bank you are dealing with.

The question you all may be asking yourselves is, what is a short sale? A short sale in real estate is where a mortgage company looks to cut their losses by agreeing to a reduced payoff of their loan in exchange for not having to foreclose on the property. The reason it is called a short sale is not because of the length in time it takes to close the loan, but because you are “shorting” the bank on the amount owed. Typically, a short sale is done when a homeowner is coming close to losing their home due to missed mortgage payments because of job loss or some other financial hardship. This route is more ideal for most banks as foreclosing on a property costs money and there is more risk for the bank to lose even more due to vacancy and vandalism.

How did people get into this position? Well, most short sales I have seen are still because of the mortgage bubble back in the early 2000s. The mortgages given at the time were typically conventional in which had a time frame of a specific interest rate and mortgage amount and then it would escalate after that time frame. In other words, someone’s mortgage could have been about $1400 a month for 5 years and then after that timeframe, it may have jumped to $2200 or so. Consequently, the homeowner cannot afford to live and pay the home. Not to mention, during this same time period, homes were at an all-time high in purchase price so homeowners were left holding the bag after all was said and done.

Why would homeowners decide on a short sale over a foreclosure? Well, it gives more dignity when moving out of the house. Neighbors typically only see another neighbor moving without seeing notices or the police being asked to have the homeowners vacate the property. Also, it is better for someone’s credit score to have a short sale over a foreclosure. I am not a credit person, but from what I have been told, it is like a foreclosure is an F and a short sale is more like a C+ grade and allows for a quicker time for someone to potentially buy another property later in life. Finally, homeowners decide on a short sale because there is typically some sort of relocation fee given to the homeowners as they leave so they are not left with spending a significant amount of money to leave. The highest I have seen in the past year is about $10k.

Now, if you are in the market to buy a property and you want a short sale, it will probably give you one of the best deals out of all. However, as I mentioned before, IT TAKES A LOT OF TIME. You are working with a bank that has hundreds, if not thousands, of homes in the same position. Regardless, in my experience, I have two properties I have under contract in Belleville. I finally got the agreed upon purchase price from the bank about 4 days ago and I submitted the offer in September 2016! However, in my honest opinion, it is a homerun deal. Anyways, if you are in the market to buy a short sale, feel free to ask me further questions and I would be glad to help. Thanks!