02 Apr Should I Buy a Short Sale?
Buyers often pursue short sales to get a good deal and believe buying a short sale will present that opportunity. With today’s current market situation, short sale homes have become a great option for finding a home. There is a lot of unnecessary confusion with the term “short sale”, and the process of buying a short sale home. There are many short sale homes for sale that can be searched via websites, so it’s important to know if buying a short sale home would be right for you.
What is a “Short Sale?”
A short sale is when the homeowner owes more than they could sell their home for and they are not able to pay the difference, or deficiency. A short sale is not always an option for an “underwater” homeowner, for the bank will only approve the short sale if it is to their advantage. Though, they are accepting less than the full price of the mortgage, but it’s sometimes better for the bank to not have to deal with foreclosure process. The homeowner must prove they can’t make their mortgage payments through a short sale package with a hardship letter. Selling your home on a short sale allows the seller to avoid the negative impacts of foreclosure, though they still can’t buy a home for at least a couple years.
A short sale means the seller’s lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it. Be aware that the seller need not be in default — to have stopped making mortgage payments — before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it.
Buying a Short Sale
Buying a short sale can save you money, which is the main reason for its popularity among home buyers today. It can be great, but there are some considerations to understand when buying short sale homes. Your housing needs have to be stable for months to be able to pursue a short sale home for sale, because the process of buying a short sale home is lengthy. The lender evaluates and then approves the terms of the short sale. They do an appraisal or Broker’s Price Opinion to see that the home is sold for a price comparable to other homes in the area. This process can take months, and is further complicated when more than one lender is involved. So, you will have to be patient to earn any savings you receive. You will have to be willing to wait months and possibly never get the house if the bank terms don’t come through or your offer is rejected. The bank has to feel that your offer is high enough to accept because they are trying to lose as little money as possible. It can even take months for the bank to respond to the offer. Additionally, you will need to be thorough in looking through the house and making your offer include any necessary changes the house needs, because short sale homes are sold “as is.”
Working with a Realtor
With all of the difficulties of buying short sale homes for sale, you will certainly want a professional to be helping you every step of the way. They will give you valuable advice in whether it is worth your time to look into a short sale homes, or not. They will do their own Market Analysis so that you know if a short sale home is a good deal, or priced too high. They will be able to save you money whether it’s buying a short sale home for sale, or finding a pre-existing home. They can give you the breakdown of the pros and cons of a home. As long as you know some of the possible problems, as well as the potential benefits of buying a short sale home for sale, you will be able to make a wise, informed decision.
Hire an Agent with Short Sale Experience
It’s one strike against you if the listing agent has never handled a short sale, but it’s even worse if your own agent has no experience in that arena. You need an experienced short sale agent who can anticipate surprises and stop problems from happening. An agent with experience in short sales will help to expedite your transaction and protect your interests. You don’t want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner.