Short-Sales in Coral Gables and Miami: Deal or No Deal?

posted on December 22nd, 2009 filed under: Real Estate News

Short sales are infamous for delays between contract and closing.  Numerous short sales in Coral Gables and Miami have sat in pending status for many months without closing.  This is usually because the seller’s lender needs to decide whether, and on what terms, to allow a sale for less than the mortgage balance.

The lender and seller often need to negotiate how much of the loss the seller will continue to shoulder.  A short sale is not necessarily a forgiveness of debt.  The lender may insist that the seller remain responsible for all or a portion of the loss.  The lender and seller may take time to negotiate what will secure that unforgiven debt once the house is no longer available as collateral — maybe the seller has other assets, or maybe the seller’s salary will be tapped for a payment plan.

You might wonder whether the buyer and seller have a deal while that process plays out.  Can a new buyer show up, offer more for the Coral Gables or Miami home that they wish they saw sooner, and squeeze out the first buyer?

No, it’s a real deal.  A typical real estate contract contains a financing contingency providing the buyer time to get a loan or cancel the deal.  A short sale contract simply adds a financial contingency on the seller’s side, providing the seller time to get the lender’s approval.  Unless and until that contingency fails and the contract dissolves, the deal is on.

Remember, the seller in a short sale is still the owner — albeit one who is dismally underwater on their Coral Gables or Miami property.  Unlike a foreclosure, where the bank already owns the property and is the seller, a short sale makes the bank’s approval a mere contingency in a contract between the buyer and overindebted seller.

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posted by // This entry was posted on Tuesday, December 22nd, 2009 at 9:46 am and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

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