Home » Buy A Home » The Home Buying Process » What is a Short Sale
A short sale is when the seller has told the lender that they cannot make the mortgage payments any longer, has shown they have a hardship as to why they are or will be in default on the loan, or simply owes more than the homes market value and has no assets available. The lender may agree to accept less than the amount owed on the loan to satisfy the loan. This allows both the lender and the seller to avoid foreclosure on the property. If you are looking at short sale properties there are a few things that you need to know about. It is very important to understand what to expect and what certain terms mean.
Unfortunately despite the name short sale do not happen in a short amount of time. If you have patience, access to good legal advice, and can be flexible in a few areas a short sale may be just the home for you, and you may find yourself getting a home for a very good price. On the other hand if you need to close quickly, this is not the best option for you.When you make an offer on this type of property it needs to not only be accepted by the sellers, ut it also has to be submitted to the sellers lender and accepted by them as well.
If you have to sell your current home and need to time that closing with the closing on a short sale you may have some difficulty, since there is no guarantee on the closing time frame with a short sale. Your real estate agent will help you coordinate this with you, but it mayu mean delays in closing on the home you are selling and you need to make sure the buyers of your current home are aware of the situation right from the start.
This uncertainty will work best for buyers that do not have a home to sell and do not have a set time that they need to move in. If you are able to be flexible with your time or are looking for an investment or second home short sales can be a good place to look.
Your real estate agent will advise you to have a lawyer look over the agreement. Agents will help you negotiate the offer but they cannot give legal advice. the lenders have lawyers working on their behalf and so should you to make sure you are getting the deal that you thought you were.
Your real estate agent will be able to research and find out who hold the title and if a foreclosure notice has been filed on the property and what the balance owed to the lender. This will help guide you in determining how much to offer for the home. A seller's lender is accepting less than what they are owed on the mortgage and they will want o get as much of their money back as possible. Your agent can send along a list of comparable property sales to help support the price you are offering, sometimes this can help close the deal.
Since the lender is accepting a loss, in most cases they will not pay for any inspections, home guarantees on the property, or repairs needed. This means you absolutely should get a home inspection so you know what repairs are needed, with the knowledge that you are usually buying the home "as-is".
Be prepared to be wait; some lenders can make a decision in two-to-three months, while others may submit offers to committee, which can take longer. Your real estate agent will maintain contact with the lending institution regarding the status of your offer.
A short sale can be an option for a patient buyer on a diligent search for affordable homes for sale, but it is important to be aware that it is not like a typical listing. Taking on the challenges with an experienced real estate agent will make the deal go as smoothly and quickly as possible.