• Texas Real Estate Commission Consumer Protection Notice
  • Texas Real Estate Information About Brokerage Services

Navy Fellas Realty Group

Real Estate, Residential sales and purchase

  • Home
  • About Us
    • About James
    • About Ashley
    • About Our Team
    • Accessibility Statement
  • Property Search
  • Resources
    • Home Buyer Tips
    • Home Seller Tips
  • Video Walkthroughs
    • Saratoga Homes (Plantation Lakes -Katy, Tx.)
    • David Weekly Home (Towne Lake)
    • Taylor Morrison Home (Alder Trails)
    • Ashton Woods (Towne Lake)
  • Blog
  • Contact

Understanding Short Sales: What They Are and Why You Might Want One

February 23, 2024 by James Scott

In the world of real estate, the term “short sale” often surfaces in conversations, but its meaning and implications might not be immediately clear to everyone. As a real estate agent, it’s important to not only understand what a short sale is but also to effectively communicate its potential benefits to your clients. Let’s delve into the intricacies of short sales and explore why they might be advantageous for certain buyers.

What is a Short Sale?

A short sale occurs when a homeowner sells their property for less than the outstanding mortgage balance. In essence, the proceeds from the sale fall short of what the homeowner owes the lender. Short sales typically happen when the homeowner is facing financial hardship and is unable to continue making mortgage payments.

Why Would You Want a Short Sale?

Opportunity for Buyers: Short sales can present unique opportunities for buyers to acquire properties at potentially discounted prices. Since the seller is motivated to sell quickly to avoid foreclosure, buyers may find properties listed below market value.

Potential for Negotiation: Short sales often involve negotiations with the lender. Buyers, along with their real estate agents, can negotiate terms such as purchase price, closing costs, and repair credits. This flexibility can be advantageous for buyers seeking a good deal and willing to invest time in the negotiation process.

Less Competition: Short sales may have less competition compared to traditional sales or foreclosed properties. Many buyers are hesitant to pursue short sales due to the complexities involved, which can reduce competition and increase the chances of securing the desired property.

Potential for Property Improvement: Buyers interested in purchasing distressed properties may see short sales as an opportunity to invest in properties that require renovation or improvement. With the potential to add value over time, short sale properties can be appealing to buyers looking for long-term investments.

Assistance for Distressed Homeowners: While short sales offer benefits to buyers, they also provide a lifeline to homeowners facing financial hardship. By facilitating a short sale, homeowners can avoid foreclosure and mitigate the long-term consequences of defaulting on their mortgage.

Considerations for Buyers

Despite the potential advantages, buyers interested in short sales should be aware of certain considerations:

Complex Process: Short sales involve a complex and often lengthy process that requires patience and persistence. Buyers should be prepared for delays and uncertainties throughout the transaction.

Potential for Additional Costs: While short sale properties may offer discounts, buyers should be prepared for potential repair costs or unforeseen expenses associated with the property.

Risk of Rejection: Lenders have the final say in approving or rejecting short sale offers. Even after negotiations, there is no guarantee that the lender will accept the proposed terms.

Short sales can be a viable option for buyers seeking discounted properties and willing to navigate the complexities of the process. As a real estate agent, it’s essential to educate clients about the potential benefits and considerations associated with short sales, helping them make informed decisions that align with their goals and financial capabilities.

 

Filed Under: Real Estate Tagged With: Housing Market, Real Estate, Short Sale

How Will A Short Sale Affect Your Ability To Buy Another House In The Future?

October 20, 2023 by James Scott Leave a Comment

The Short Sale and Your Credit
One of the most immediate consequences of a short sale is its impact on your credit score. When you sell your home for less than the amount owed on your mortgage, the lender reports the debt as “settled” or “paid less than the full amount,” which can significantly lower your credit score.

A lower credit score can make it challenging to obtain new credit, including a mortgage for a future home purchase. Lenders rely on your credit score to assess your creditworthiness, and a low score may lead to higher interest rates, larger down payments, or even mortgage loan denials.

Eligibility for a New Mortgage
A short sale can also impact your eligibility for a new mortgage. Most lenders have waiting periods before they will consider your application for a new home loan. Typically, you can expect a waiting period of 2-7 years.

Mitigating the Impact of a Short Sale
While a short sale can affect your ability to buy another house in the future, there are steps you can take to mitigate its impact and improve your prospects of obtaining a new mortgage:

Rebuild Your Credit: Start by addressing any credit issues that led to the short sale. Make payments on time, reduce outstanding debts, and work to improve your credit score.

Save for a Down Payment: Building a significant down payment can make you a more attractive borrower to lenders. It also reduces the amount you need to borrow, which can lower your monthly mortgage payments.

Shop Around for Lenders: Different lenders have varying policies regarding waiting periods after a short sale. Some may be more lenient than others, so it’s essential to shop around and explore your options.

Consider Government-Backed Loans: FHA and VA loans may have more lenient requirements and shorter waiting periods for borrowers with a history of short sales.

A short sale can have a significant impact on your ability to buy another house in the future, primarily affecting your credit score and eligibility for a new mortgage. However, with patience, financial responsibility, and careful planning, you can improve your financial standing and increase your chances of becoming a homeowner once again. Be sure to consult with financial advisors, mortgage experts, and real estate professionals to navigate the complexities of post-short sale homeownership successfully.

Filed Under: Short Sale Tagged With: Credit, Real Estate, Short Sale

3 Critical Tips for Buying a Home in a Short Sale

March 30, 2023 by James Scott

3 Critical Tips for Buying a Home in a Short SaleYou just found your perfect home, and you feel like everything is right including the price. But, what could be wrong with your ideal home? Maybe, it is being sold as a short sale, and that could present a major challenge if you want to become be the eventual homeowner.

Short sales are different from other conventional real estate transactions since the property in question is usually listed at a price that is much lower than the amount of the outstanding mortgage debt.

Unlike a regular sale, the homeowner must obtain permission from the lender before proceeding with the transaction. Whether you are a veteran property buyer or a first-time home buyer, closing a deal on a short sale can be a challenging and stressful experience. We compiled the top three tips for buying a home in a short sale.

Consult a Short Sale Expert

First, you should consider getting help from a short sale expert who will help you identify homes that are being offered as short sales, help you determine a reasonable purchase price and also advise you on what to include in your offer to make it attractive to the seller.

Before you go for a particular short sale expert, ask them how many buyers they have helped purchase homes on short sales and how long they have been in business.

Good Deals Take Patience

Secondly, remember to be patient when engaging in a short sale deal. There is a high likelihood that most buyers will get impatient after several weeks of waiting and walk away from the deal leaving you in a strong position to negotiate.

If you understand that the initial offer on any short sale can take a long time before the lender accepts or rejects it, you will be in a better position to get a good deal since there will be no stiff competition. However, you should keep in mind that the lender might reject your offer.

Get a Full Loan Approval Early

Lastly, make sure that you get approved for a loan and not just pre-approved. Go through the trouble of getting approved if you want to stand a good chance of landing your dream home through a short sale.

Keep in mind that there will be multiple bids on the property and most of the prospective buyers will be pre-approved. Since you want to get the home at the best possible price below the market prices, being fully approved will make your offer stand out with the lender since you no longer face the risk of your financing falling apart at the last minute.

Entering into a short sale transaction will require patience and diligence. One of your best partners will be your trusted real estate professional. 

Filed Under: Real Estate Tagged With: Pre-Approval, Real Estate, Short Sale

What Is A Short Sale?

January 22, 2020 by James Scott

What Is A Short SaleNobody enters into a mortgage assuming they are going to fall short on their payments; however, life happens and borrowers might need a way out. In serious situations, lenders may elect to foreclose on homeowners who are unable to make their mortgage payments. Fortunately, there might be another way out. This is called a short sale.

A short sale can be used to help homeowners who are struggling cater to those who are looking to buy a home. At the same time, there are risks to both parties. Therefore, there are a few important points to keep in mind.

What Is The Structure Of A Short Sale?

If someone owes more on their mortgage than the property would otherwise sell for, this is called a short sale. In this situation, the lender accepts the money coming from the sale of the home rather than that money going to the homeowner. This is because the homeowner still owes a significant amount of money on their mortgage.

Take, for example, someone who owes $300,000 on their mortgage. In a short sale situation, he or she would sell the home for $250,000 in a short sale. In this fashion, the lender agrees to accept a smaller amount of money for the home than he or she would get otherwise. In essence, the lender is then short $50,000. This is where the name comes from.

This is different from a foreclosure. A foreclosure happens when the borrower falls so far behind on payments that the lender reclaims the property.

The Benefits Of A Short Sale

The biggest benefit of a short sale is avoiding foreclosure. A foreclosure is a disastrous event for someone’s credit score. When someone agrees to a short sale process instead, he or she will often buy a more affordable home shortly thereafter. 

Buying A Home In A Short Sale

On the buyer side, the biggest benefit of targeting a short sale home is that there is usually a great deal on the price. The lender is already not getting their money on a regular basis and is often motivated the sell the home quickly to recoup their money.

On the other hand, short sales often take longer to proceed. The lender has to approve the sale and price, which might lead to delays. The condition of the house may also not be in good shape. Therefore, be sure to get a home inspection.

Calling your trusted real estate agent and mortgage loan professional is the best thing to do if you have questions regarding your home and a possible short sale.

Filed Under: Real Estate Tagged With: Market Trends, Real Estate, Short Sale

How To Buy A Bargain Home As A Short Sale

August 2, 2019 by James Scott

How To Buy A Bargain Home As A Short SaleA short sale is when the mortgage lender(s) agrees to sell the property for a lower amount than the loan-balance remaining.

During the worst moments of the 2006 to 2008 real estate crisis, homes sold as short sales for a fraction of their value. Lenders had so many properties with loans in default that they could not manage the ones that they had in foreclosure.

Foreclosure is an expensive legal process that causes a lender to lose more money on a property. This is one of the motivators that encourages lenders to accept a short sale because sometimes through a short sale the foreclosure process is avoided.

Are Short Sales Still Available?

The number of short sales peaked in 2012. The inventory of homes available for a short sale transaction is much lower than the massive numbers caused by the 2006 to 2008 real estate crisis; however, they still do exist.

Short sales are still worth exploring as long as a qualified buyer has enough cash on hand or is pre-qualified with home-purchase financing that is acceptable for a short sale transaction.

A short sale may be a bargain; however, the buyer must be careful because there are some pitfalls to avoid in short-sales transactions.

The Challenging Dynamics Of A Short Sale

There are three (or more) parties in a short-sale transaction. They are the seller, the buyer, and the lender(s). All must agree to the closing sales price of the home and the terms and conditions of the sale in order for the transaction to succeed. The lender(s) forgives part or all of the mortgage loan that is secured by a lien on the property and agrees to take a loss on the sale.

A short sale only occurs when the home cannot sell for the amount of the mortgage loan(s) on the property. The home is considered to be “underwater,” which is a colloquial term for a home, with a loan(s) that is more than the home is worth.

Short sales do not close quickly because the paperwork is complicated. If there is more than one lender on the property, the process is even slower. Buyers in short sale transactions need to be patient. They must be approved for financing and also approved by the existing lien-holder(s) on the property that is for sale by making a successful short-sale application.

A buyer may need to make a “good faith” security deposit to initiate the short sale application process. The deposit, which is refundable, may sit in a trust account for quite some time before the deal is approved.

Even with proper planning, a short sale deal can still fall apart. Buyers must also take on the risk that the property may need significant repairs and buy the property “as-is.” Homeowners who cannot pay their mortgages usually are not very diligent at taking care of their properties.

Summary

Short sales are an important strategy to consider when searching for a bargain property. Buyers must have cash or significant financial strength and be willing to complete the complex process for the transaction.

To reduce risk, a buyer needs to get careful inspections of the home and have a very clear idea of the costs to bring it up to a nicely-repaired condition, in order to profit from this strategy.

Your trusted real estate agent will be a reliable and necessary ally in your short sale transaction. 

Filed Under: Real Estate Tagged With: Financing, Real Estate, Short Sale

Differences Between A Short Sale And A Foreclosure

January 11, 2019 by James Scott

Differences Between A Short Sale And A ForeclosureIf you’re looking to get an untraditional deal on a new home purchase, you may encounter either a short sale or a foreclosure. These two terms refer to sales that are not usual. As a homebuyer, it’s important to understand the differences between them and how each one might affect your buying experience.

What’s A Short Sale?

A short sale is a situation where the owner has a strong motivation to hurry up and sell their home. In so doing, they’re willing to sell for less than what they owe on the house. Homeowners have a variety of reasons why they might do a short sale. Their reasons might include a personal emergency, or they might be trying to protect themselves against a future foreclosure.

In a short sale, the owner’s lender has to be apprised of the plan. In many cases, the lender is supportive of the short sale, since it keeps them from having to go through the long and expensive process of a foreclosure.

Short sales can represent great deals for buyers. However, since this type of sale is so unusual, the process of buying often takes a much longer time than a regular home purchase. You’ll need to be patient, but if the sale does go through, your patience can pay off.

What’s A Foreclosure?

A foreclosure is a situation where the owner’s lender is forcing the sale of the property due to unpaid mortgage payments. The lender is essentially taking back ownership of the property. The bank then puts the home up for sale as a foreclosure, and is the official seller of the property.

A foreclosure property may offer a good deal for a buyer, but the process may be long and drawn-out. Since the seller is the lender, they are not in any particular hurry to sell a property, and the transaction can be very complicated.

If you’re interested in buying a short sale or a foreclosure, you should look for a real estate agent that specializes in these types of transactions. Your real estate agent can help you to successfully navigate through all the red tape that short sales and foreclosures inherently have.  

Filed Under: Real Estate Tagged With: Foreclosure, Real Estate, Short Sale

3 Critical Tips for Buying a Home in a Short Sale

November 9, 2018 by James Scott

3 Critical Tips for Buying a Home in a Short SaleYou just found your perfect home, and you feel like everything is right including the price. But, what could be wrong with your ideal home? Maybe, it is being sold as a short sale, and that could present a major challenge if you want to become be the eventual homeowner.

Short sales are different from other conventional real estate transactions since the property in question is usually listed at a price that is much lower than the amount of the outstanding mortgage debt.

Unlike a regular sale, the homeowner must obtain permission from the lender before proceeding with the transaction. Whether you are a veteran property buyer or a first-time home buyer, closing a deal on a short sale can be a challenging and stressful experience. We compiled the top three tips for buying a home in a short sale.

Consult a Short Sale Expert

First, you should consider getting help from a short sale expert who will help you identify homes that are being offered as short sales, help you determine a reasonable purchase price and also advise you on what to include in your offer to make it attractive to the seller.

Before you go for a particular short sale expert, ask them how many buyers they have helped purchase homes on short sales and how long they have been in business.

Good Deals Take Patience

Secondly, remember to be patient when engaging in a short sale deal. There is a high likelihood that most buyers will get impatient after several weeks of waiting and walk away from the deal leaving you in a strong position to negotiate.

If you understand that the initial offer on any short sale can take a long time before the lender accepts or rejects it, you will be in a better position to get a good deal since there will be no stiff competition. However, you should keep in mind that the lender might reject your offer.

Get a Full Loan Approval Early

Lastly, make sure that you get approved for a loan and not just pre-approved. Go through the trouble of getting approved if you want to stand a good chance of landing your dream home through a short sale.

Keep in mind that there will be multiple bids on the property and most of the prospective buyers will be pre-approved. Since you want to get the home at the best possible price below the market prices, being fully approved will make your offer stand out with the lender since you no longer face the risk of your financing falling apart at the last minute.

Entering into a short sale transaction will require patience and diligence. One of your best partners will be your trusted real estate professional. 

Filed Under: Real Estate Tagged With: Pre-Approval, Real Estate, Short Sale

What You Need To Know About Short Sales

August 2, 2018 by James Scott

What You Need To Know About Short SalesOn the surface, a short sale seems like the perfect deal. However, before you take the plunge, you need to understand how this type of home purchase works.

What Is a Short Sale?

A short sale is a home sale in which the homeowner is selling the home for less than he or she currently owes on the mortgage. In most cases, this means that the buyer is paying less for the home than it’s worth, which leads to instant equity.

Short sales allow homeowners to get out from under mortgages without damaging their credit as much as a foreclosure. Lenders often agree to short sales because the foreclosure process is lengthy and expensive, so short sales can be more beneficial for both parties in the long run.

Advantages

When you buy a short sale, you can often get a nicer home for a lower price. In most cases, you will still be able to use financing to purchase a short sale.

A homeowner attempting a short sale also tends to be highly motivated, which means they will be willing to negotiate on almost any aspect of the sale.

Disadvantages

Although purchasing a short sale can be lucrative, the process isn’t easy. Short sales can take as long as nine months to complete, which is much longer than the time required for the typical home purchase.

Because the homeowner owes more on the mortgage than you will be paying, the bank must agree to the price. This means that even if the homeowner is willing to accept your offer, the bank can still reject it.

If the home secures more than one mortgage, all of the lenders must agree to the sale before it can close. This can lengthen the process even more.

Even though the bank will hold up the process, they will want you to be flexible. Banks are less likely to approve offers from buyers with multiple contingencies, such as a house that needs to sell before closing.

Should You Purchase a Short Sale?

The decision to make an offer on a short sale home is personal. Although there are many obstacles and potential disadvantages, you may be able to save money and build equity quickly if you are able to complete a short sale successfully.

Keep in mind that most banks considering a short sale will want to see a well-qualified borrower who offers flexible closing terms, so it’s best to contact your mortgage professional for a pre-approval before you make an offer on the home.

Your trusted real estate professional is a qualified partner to help you with a short sale home purchase.

Filed Under: Mortgage Tagged With: Mortgage, Pre-Approval, Short Sale

Is Buying A Short Sale Right For You?

June 12, 2018 by James Scott

Is Buying A Short Sale Right For YouIf you have been looking for a new home, and you find one offered under a short sale, this may be to your advantage. While some buyers are wary about buying a home that needs to be sold with the approval of the lender, it’s a great way to get a bargain on a home that you love.

A short sale may be a perfect way to buy a home, as long as you are able to wait until the offer is approved.

The Basics Of A Short Sale

A short sale occurs when the homeowner is facing a foreclosure and trying to avoid it. The true owner of the property, is the lender who provided the money to purchase the home. The borrower owes more on the home than it is worth, and many stop making mortgage payments. Instead of allowing the home to sit there and go to a foreclosure, the lender tries to cut their losses through the process of a short sale.

Additionally, there may be other liens on the home that have to be satisfied by the sale of the property. Anyone that holds a lien on the property has to negotiate the money they are willing to accept for the deal to be finalized.

Why A Short Sale Benefits The Buyer

When you make an offer on a home that is selling under a short sale, you can usually offer less than what the home is worth. The homeowner is eager to sell the home. The homeowner will want to accept an offer fast to get the process started and avoid a foreclosure.

While you may have to wait longer for a short sale to go through than a traditional sale, the savings on the price of the home are usually worth it. Lien holders understand that a short sale is usually the best option to get most of their money, so they are anxious to settle the deal fast.

A short sale is right for you if you aren’t trying to buy a home fast. When you are a savvy buyer, you can make an offer less than the asking price, but you’ll have to wait for all lien holders to accept it. If your current living situation provides you with the opportunity to wait, a short sale will give you more house for your money.

Talk with a real estate agent to learn more about a property if you find one you love that is under a short sale.

Filed Under: Real Estate Tagged With: Equity, Real Estate, Short Sale

The Basic Facts About Short Sales

April 26, 2018 by James Scott

The Basic Facts About Short SalesAs a potential home buyer, you are probably familiar with what a typical sale looks like. You probably also have a basic understanding of what a foreclosure is and how it works. Another type of sale that may be less understood is called a short sale.

These sales are not as popular in the market, but you may come across a few. You may even fall in love with a home that is listed as a short sale. What does this mean for you as the buyer? These are the basic facts that you need to know about these homes and the process for purchase. 

What Is A Short Sale?

A short sale is negotiated when the lender for the current homeowner’s mortgage agrees to list the house for a smaller mortgage payoff amount. This means that they will be taking in less money than what is owed on the property in order for it to sell quickly on the market.

This usually happens when the current owner of the property, the seller, is in a distressed financial state. There are many reasons why a seller may have lost the ability to pay their mortgage, such as losing income or unexpected expenses. Maybe the owners are going through a complicated divorce and need to unload the property. Regardless of the reason, the lender has an incentive to remedy this situation.

How Does It Work For The Buyer?

When it comes to purchasing a short sale property, the process is not much different than purchasing any other home on the market. The lender will want to make sure that you will be able to complete the purchase, especially under these circumstances, so you will likely need to be preapproved or prequalified before your offer can be accepted. 

One major difference is that the process is typically more drawn out than if you were making a traditional home purchase. Even though it is called a short sale, it is not something that happens very quickly. In fact, it can take an average of 2 to 4 months for a short sale to be approved and for the actual closing to take place. 

Now that you understand the basics of a short sale and how it works, you can decide if it is something that may fit into your criteria and timeline. If so, and you do find a home you love, you should not let something like a short sale stop you from getting it. Your real estate agent can help navigate you through the process to make it as simple as possible. 

Filed Under: Real Estate Tagged With: Pre-Approval, Real Estate, Short Sale

Connect with Me!

SEARCH FOR HOMES 
What’s my home worth? 

Return to top of page

Copyright © 2025 Navy Fellas Realty Group. All rights reserved.   Log In