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Short sales can be time-consuming and confusing

Despite the increasing number of short sales throughout the country and in South Carolina, the numbers may be deceptive about the short sale practice.

In fact, it is not necessarily easy to complete a short sale successfully as complications often arise. If you are considering your options when it comes to a home that is currently under water or possibly foreclosure, pursuing a short sale is certainly one possible option. However, it is not something that should be entered into lightly and without a complete understanding of all of the potential ramifications.

If you are a buyer of a home that is being sold as a short sale, you would certainly want to ensure that you do not put yourself in a position in which you could lose money if the lender ultimately rejects the real estate transaction.

The following are among some common reasons why a short sale can be complicated:

  • Failure to advertise the home for sale as a short sale. Some sellers will not list a home as a short sale. A potential buyer can end up running into a lot of roadblocks if their offer is ultimately not accepted by the lender.
  • Sellers and lenders are at odds in a short sale. Sellers who are underwater have nothing to lose, so they can accept any offer on their home. On the other hand, the lender has invested a certain amount in the home, which will be the basis for a determination as to whether an offer is acceptable or not.
  • Short sales must be approved by the lender. However, lenders generally will not consider a short sale until a purchase contract has been executed, which can leave all sides in the dark until the lender makes a decision.
  • Short sale approvals are generally not binding. This means that lenders can walk away from accepting a short sale at any time, and meanwhile continue to pursue a foreclosure action, or also continue negotiating with a seller about a loan modification.

These are just some of the complexities of short sales that both buyers and sellers need to understand when considering the sale of a home that is underwater in South Carolina. Homeowners can also face issues when it comes to property-related debt and other deficiencies. Due to the confusing nature of the process, it is always advisable to seek out legal advice when considering a short sale.

Source: Los Angeles Times, "Short-sale purchases can easily fall apart," Lew Sichelman, Oct. 28, 2012

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