Maybe you’ve come across Charlotte, NC homes listed as ‘short sales.’ So what are they? 

Short sale homes are properties sold at a price lower than what is owed on the mortgage. These sales are initiated by the seller, which makes them different from lender-initiated foreclosures.

Short sale homes are often heavily discounted in price, and the competition from other buyers is often low. However, buying a short sale property takes longer to complete. Homes are sold as-is, which requires more effort on the seller’s part. 

Before you go ahead and look for short sale  homes, it will help to know everything about them first.

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What is a Short Sale?

A short sale (or pre-foreclosure sale) home is a property sold at less than the price owed for the mortgage. 

It occurs when the homeowner is no longer able to pay their mortgage. Instead of having the home foreclosed, they will apply to the lender to get it short sold. 

Whether or not this pushes through will depend on two factors:

  • The home is worth less than what the seller owes.
  • The seller demonstrates financial hardship. 

Unlike a traditional sale, the lender gets all the revenue from the sale. They may forgive the difference.

Likewise, they may also file for deficiency judgment. This lawsuit gives the lender the right to pursue the seller for the remaining money owed.

Short sales in Charlotte NC

What is the Difference Between a Short Sale and a Foreclosure?

The difference between the two lies in the seller's control of the situation.

In simpler terms, a short sale is voluntary. Here, the homeowner initiates the sale by submitting a financial hardship package to their lender. Everything is subject to the lender’s approval, of course. 

On the other hand, a foreclosure occurs when a lender seizes the property. Usually, it's because the owner is unable to make payments. It's a more expensive process since the seller (and the lender) may have to file for bankruptcy. 

Even with their differences, both processes only occur if the owner is unable to pay the mortgage.

In some cases, sellers may do so because they’re ‘underwater.’ In other words, they owe a lender more than the home is worth. Both processes affect the seller's credit at the end of the day. 

A short sale or a foreclosure will appear as ‘not paid as agreed.’ As such, it will linger on the seller’s  credit report for seven years. Despite this, a short sale can help the seller re-enter the housing market right away. This is possible with an FHA loan, just as long as you meet the following requirements:

  • There are no late mortgage or installment payments in the year before the short sale. 
  • There are no late payments in the year before applying for a new mortgage. 
Charlotte NC Homes for Sale

Who Benefits From a Short Sale?

All parties benefit from a short sale. In the seller’s case, they get to avoid foreclosure. There’s also a potential for debt forgiveness and absorption. They also will save money since the lender - and not themselves - will have to pay for agent commissions and other associated sales costs.

As a buyer, you get to enjoy these benefits:

Discounted Sale Price

While a short-sold Charlotte, NC home will be priced according to market value, you may be able to get it at a lower price. The lender might be more than willing to cut their losses, which means they may sell the home at a discounted rate.

Add to that, you don’t have to pay for closing costs or broker’s fees, since the lender pays for these.

Less Competition 

Charlotte, NC, is one of the hottest housing markets of today, according to Realtor.com. With a sales growth of 13.8%, it’s no surprise that the prices in the area have increased by a whopping 5.2%. 

With the offers that abound, it may be harder for you to get your dream home in this market. This is especially the  the case if you're looking for a price you can afford.

That's why Nancy Braun recommends looking into short-sale homes. It's a less competitive niche since most buyers tend to stay away from them. Unbeknownst to them, it's easier to make lower offers on these properties! 

What is the Downside of a Short Sale on a Home?

As with any other transaction, there are some downsides to buying a short-sale home. 

Sub-Par Home Condition

Not all short-sold homes are in disrepair. However, a good number of them are, and it’s mainly because their owners are strapped for cash. They may lack the resources to keep their Charlotte, NC home in good condition. 

That said, short-sale homes are often in better condition than foreclosed ones. 

Lengthier Process

Compared to a traditional sale, buying a short-sold Charlotte, NC home takes longer. That’s because the lenders (and lienholders, if any) need to be involved in the process. 

The more lienholders there are, the slower the sale will be. 

As for the seller's part, their doubts (and incomplete documents) may cause further delay.

Higher Risk

Short sale Charlotte, NC homes are sold as-is. They often lack typical disclosures, as you would find in traditional sales. As a result, the home condition or deal quality may not be as clear to an interested buyer. 

More Work Involved

While every traditional sale requires research, buying a short-sold home requires more effort. You will need to look up the property's value, liens, and other potential issues. That said, Nancy Braun can help you with this brunt work - among many other things.

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Charlotte NC Short Sales

What is the Process for a Short Sale?

If you're interested in buying a Charlotte, NC home on a short sale, you will need to undertake these six steps:

1. Apply (and Get Approved) for Financing

Like a traditional deal, the first step is applying for financing. Of course, you need to be approved as well. 

After all, the lender wants to see that you, the buyer, can carry payments on the property.

Getting a loan prequalification or a pre-approval letter is sure to come in handy. You’ll need to provide a copy on your offer, after all. 

Is it Hard to Get a Loan for a Short Sale?

It's not, but the process can take longer than a traditional sale. 

With the help of Nancy Braun and her real estate agents, though, you may reduce the waiting time to a few weeks (or months.)

That said, interest rates may fluctuate during the wait. The changes may benefit you - or they may not. 

In most cases, the lender will refuse to lock in the amount for beyond 30 days, unless you pay a fee. 

2. Get an Experienced Realtor - Like Nancy Braun

It's challenging to find the perfect Charlotte, NC home, especially ones on a short sale. If you want to get your hands on a great deal, then it's best to hire an experienced realtor like Nancy Braun. 

As the owner and broker-in-charge of Showcase Realty, she has 24 years of experience under her belt. She has access to numerous Charlotte, NC listings, so you're sure to find the short-sale home of your dreams. 

Top Real Estate Agent in Charlotte NC

3. Do Some Research

It’s advisable to learn everything you can about the property. 

The good news is you don’t have to struggle with this. Nancy and her agents have access to the Multiple Listing Service (MLS). This is a database of homes on the market, including those recently sold. 

With the MLS, you'll get a bird's eye view of sales in the area. This should give you an idea of the value of the Charlotte, NC, short-sale home you’re eyeing. 

Likewise, your research should involve:

  • Checking the amount the seller owes the lender 
  • Knowing every person or entity with a property claim (lienholders)
  • Determining if there are any liens on the home
  • Searching the title 

Again, Nancy Braun and her team can help you with all of these. 

4. Make an Offer

Before placing an offer, make sure you understand the market and the conditions. This is why Nancy Braun recommends doing your research beforehand. 

Remember, the lender is trying to recoup as much as possible. On top of  that, they may have to meet specific investor guidelines. 

This is why Nancy Braun recommends making an offer close to the property's market value. If you go too low, there's a big chance that the lender may end up rejecting it.

Tip: A large down payment  (preferably in cash) may help increase the chances of your offer getting accepted. 

Why Do Short Sells Get Rejected?

The lender may reject your offer if:

  • You’re an unqualified buyer. The lender will check your credit history, job history, debt ratio, and many other things. Even if you can afford the mortgage, this doesn’t necessarily mean that you can afford a home. 
  • The price is too low. The lender will reject the offer if they believe they’ll make more money with a foreclosure.
  • The short sale package is incomplete. This is often the case with agent-less transactions. But with Nancy Braun by your side, you’re sure that all the necessary documents are included in the package. 

5. Have the Charlotte, NC Property Inspected

Again short sale homes are sold as-is. This means you may get it at a lower price if it has a couple of issues.

Sure, the seller should disclose any issues, but these are often relegated to the wayside. 

Even if the low price is a steal, Nancy recommends having  the home inspected before closing.

This is essential if you’re applying for an FHA loan. It requires certain home repairs to be made, such as: 

  • Peeled paint
  • Doors that don’t open and close properly
  • Leaks and plumbing issues
  • Leaky or defective roofs

As a short sale buyer, the good news is you have time to do this. There’s a due-diligence contingency period covered in the process, after all. 

Inspections will give you an idea of the repairs needed,  and the costs that come with them. You don’t want to purchase a home where repairs cost more than the property itself. 

6. Close the Deal

Say the lender has accepted your offer. Before closing, you need to make sure that they, and the lienholders,  are willing to release the collateral.

Likewise, the seller will need to submit the following documents for you to close the deal:

  • Hardship letter. This should detail the seller's problems and why they cannot make mortgage payments.
  • Proof of assets and income. This should include two years’ worth of the seller’s tax documents and bank statements. 
  • List of liens. This should be an updated list of all liens, especially if the seller has racked up multiple debts.
  • Comparative market analysis. This is a study of similar homes on the market. It also includes recently sold properties. These data help prove that the seller owes more than the property's worth. 

Once everything is set, you’ll be able to close on your short-sold Charlotte, NC home. 

Who Pays the Closing Costs on a Short Sale?

In contrast to the traditional sale, the lender (and not the seller) pays for the closing costs. That includes agents' commissions and other related fees. 

Tip: if you want to improve your chances of getting the home, you can offer to pay the closing costs. This will absolutely make you rise above the rest, since the lender is trying to recoup as much money as possible. 

What is the Average Time for a Short Sale? 

Even if it has ‘short’ in its name, this type of sale is far from quick. The process often takes longer at 120 days…and upwards of a year. This is considerably longer compared to a  traditional sale. It only takes an average of 45 days.

For one thing, the short sale process is more complex. There is a lot of paperwork needed. Even if you make a quick offer, the bank will need a few weeks (even months) to review it.

Let’s say the seller accepts your offer. The lender may reject it if they believe they’ll earn more by foreclosing the property. In other words, the lender is in charge of the overall sale,  which is why the process takes more time. 

There’s also the issue of liens. The more lienholders there are, the longer the closing process will be. That's because everyone has to give permission for the deal to proceed. If any lienholders refuse the sale, the lender has no choice but to go ahead and foreclose the property.

Short Sale Agents Charlotte NC

How Often Do Short Sales Fall Through?

According to researchonly 40% of short sales close. While a buyer pulling out is one reason, it’s often due to seller or lender issues. 

For example, even if the lender decides to release the home's lien, the lienholder is still free to sue the seller later. More often than not, this could prod sellers to back out from the sale. 

This low rate is one of the reasons why you should hire Nancy Braun and her team. They can help you get through this major hurdle, among many other steps to acquiring a short sale home.  

In Conclusion: Is Buying a Short Sale House a Good Idea?

As you see, there are benefits - and some drawbacks - to buying a short sale Charlotte, NC home.

Yes , it’s cheaper, and there is less market competition. 

That said, the property is often sold as-is. The process is longer, and there is a need to pay a bigger down payment amount. 

If you don't mind these minor setbacks, then you're good to go. With Nancy Braun by your side, you're sure to get your short-sale home…and at an affordable price. 

Nancy Braun

Call me, Nancy Braun, at (704) 997-3794. Let’s talk about your needs and wants in a home.

Nancy Braun

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