How Does a Short Sale Work in Las Vegas, NV

A Las Vegas, NV, short sale works the same way as short sales throughout the country but involves local market dynamics, including real estate trends and laws. A short sale occurs when the homeowner sells the house for a price less than what is owed on the mortgage. The lender takes this lower figure, forgiving the difference between the sale price and the mortgage balance. Although short sales can be a way for homeowners to avoid foreclosure, they are complicated and require the lender’s agreement, so the process takes time and is anything but sure.

Why Homeowners Pursue Short Sales in Las Vegas

In Las Vegas, as in the rest of the U.S., homeowners generally attempt a short sale if they fall on hard times and can no longer make payments on their homes. This could be due to the loss of a job, medical expenses, divorce, or other financial problems. Homeowners may be “underwater” in that they owe more than the home is worth, mainly if there is a fluctuating housing market.

Las Vegas experienced a dramatic real estate crash in the recession of 2008, which resulted in many residents holding negative equity in their homes. Although the market has predominantly rebounded, homeowners could be in identical situations, especially if they bought homes during the housing boom and continue to owe more than their residences currently value.

The Procedure for a Las Vegas Short Sale

Lender Pre-Approval

The homeowner must get the lender’s approval before proceeding with a short sale. The lender will only approve a short sale if it is a more attractive alternative to foreclosure. The homeowner must provide the lender with a letter of financial hardship, income verification, and proof of the property’s current market value.

Listing the Property

The homeowner (or real estate agent on their behalf) can list the property after the lender is ready to consider the short sale. Normally, the asking price will be lower than the balance of the mortgage to be in line with the market value of the home and attractive to a buyer.

Find a Buyer

Once a buyer is located, the buyer will make an offer. The seller can accept the offer, but it must be approved by the lender prior to the sale going through. This can take weeks or even months as the lender examines the offer and determines if it is acceptable.

Lender Approval 

The lender may approve the offer upon deliberation, reject it, or summon further negotiations. The lender may also ask the homeowner to contribute something towards the shortfall, or they may negotiate with the buyer to lower the price or alter the terms.

Closing the Sale 

If the home is sold, the lender approves the sale, and the buyer gets the house while the lender receives the proceeds, which are typically lower than the loan value. The lender will forgive the shortfall, though there are cases where they will pursue the homeowner for a deficiency judgment to make up the loan amount balance.

Benefits and Drawbacks

For Las Vegas homeowners, a short sale will avoid foreclosure, which has more severe long-term credit implications. A short sale can also offer the possibility of a “deficiency waiver,” in which the lender waives its right to collect the remaining loan balance. However, a short sale will damage credit (though not as negatively as foreclosure), and the process can take several months to complete, with no guarantee of success.

Conclusion

In conclusion, a Las Vegas short sale allows homeowners to sell their homes for less than the mortgage but without foreclosing. However, it is a time-consuming and often painful process, and lender approval is required. Hiring experienced professionals, such as a real estate agent familiar with short sales and an attorney, can help homeowners navigate the process successfully.