When a seller doesn't have enough money to cover what is owed on their mortgage for whatever reason, they will attempt to have a Atlanta real estate agent list their home at a steeply discounted price and a short sale is born. There is no equity - period. A property that may be worth $250,000 is listed for $150,000 in an effort to lure buyers to make offers. In Georgia you will see "potential" short sales where the bank's first contact with the seller comes when the listing agent tenders four contracts on a property and no one has cleared anything with the loss mitigation department. No one explains to the seller who is responsible for that $100,000 shortfall or the likelihood that the bank will accept a shortfall where there's no evidence of hardship. If the first lender agrees to the short sale, the second mortgage holder may not.
What does this mean to the buyer? The bank may send out appraisers and tell all offerors that the list price is now raised to $250,000 or market price. The bank can also decide to foreclose if they feel they can get a higher price in an area with rising prices or low inventory. The home is also sold in "as is" condition, no repairs, and you have to pay to have the utilities turned on and for de-winterizing and re-winterizing of the property. With the backlog on law firms closing on foreclosures, the time to close could take several months. I've heard of last minute reprieves where the closing was terminated and this is allowable should the bank so decide. You probably will be responsible for all standard selling costs as well as cost of repairs. Many banks will not take contracts contingent on the sale of your home, even if your home is under contract and closing in two weeks. Now that $250,000 market value is costing $270,000 in hard dollars. So with all the uncertainties that a short sales brings...it is probably not a smart deal to enter into for a first time home buyer or a person relocating to Atlanta and needs a sure thing!
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