Short sales are becoming more and more common on the South Lake Tahoe MLS. A short sale is when a homeowner owes more on their home than the home is worth, but their bank agrees to accept less than what is owed as “payment in full” to avoid the foreclosure process.
A lender may be willing to cut their losses with a short sale to avoid the costly and time-intensive foreclosure process. Most lenders must to have five to six times the value of their foreclosure properties on their books. This further reduces the amount of money the lender can loan out and earn interest on. Lenders would rather have that money working for them!
In order for a homeowner to qualify for a short sale they must prove that they are having a legitimate hardship. The lender will want to see a letter stating what the hardship is. The homeowner must have little or no equity in the home, usually less than 8%. Some lenders will require the homeowner to be behind on payments. Other items lenders require are the last two months bank statements on all accounts, pay check stubs, authorization to release information, and the last two years tax returns.
When purchasing a short sale in South Lake Tahoe there are some important things to remember. Once your offer is accepted by the seller, the bank could take weeks to respond. This can be very frustrating for buyers, not knowing if they will be getting the house. In most cases, short sales will be “as is” sales. The sellers probably will not have enough money to make any repairs that the buyers may ask for, and the lenders usually will not do any work. In many cases, the hassles can be worth it financially!
It is important to be knowledgeable about the short sale process so that when you write an offer on one you know what to expect. There are some great short sales and foreclosures on the South Lake Tahoe MLS. Take a look at my website bjohnson.idxcentral.net/blog to search the South Lake Tahoe MLS for some of these deals!
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