Are you considering purchasing a home through short sale? Read this helpful explanation and you’ll be well informed and ready to buy. A short sale is when the sale proceeds of a property fall short of the balance on the mortgage. The seller owes more on the home than what they are selling it for essentially. Why would anyone want to sell their home in such a way? In some cases, it’s because the owner can’t or won’t make their payments and the property is about to go into foreclosure. The process of foreclosure is expensive and time consuming for the bank, that’s why a short sale is sometimes the best option for both parties.
With this in mind, the owner and the bank are very motivated to sell. As a homebuyer, you can reap the rewards (hopefully) of a great deal and a good mortgage rate. The disadvantage to this is you are basically purchasing the home “as-is”, meaning you can’t make the usual negotiation for home repair by the seller.
If you’re willing to roll the dice on a short sale, there are a few things you should know first.
Inspect the property with a seasoned professional
Just like you would with any home purchase, a home inspection is a must. Go with your inspector and ask questions. You’ll want to pay close attention to the details on this inspection as there are many issues that could arise due to the nature of the sale. For many in foreclosure, taking their frustrations out on the house seems like good solution. If the homeowner is no longer a resident of the property, you’ll want to look for the common problems that can occur when a home sits vacant for any amount of time. This could include theft, leaks, and mold to name a few. Make sure whomever you hire for the job has experience inspecting foreclosures and short sale homes.
Just because it’s called “short” doesn’t mean it will be fast
A short sale doesn’t guarantee a quick and painless home buying experience. Short sales can take four to nine months to close and sometimes even longer. The seller has to go to the bank with whatever offer you make and wait for them to accept or reject which can take a long time. Settle in for a lot of back and forth.
Go for a Realtor with short sale experience
Now is not the time to hire your best friend’s grandmother’s next door neighbor from down the street. If ever you want an experienced and knowledgeable agent, it’s during a short sale. Short sales involve a lot of extra paperwork. With an agent who knows what they are doing, you’ll get through the process quicker and with easier.
Don’t fall for the house… no matter what
Short sales are notorious for not actually going to close. It’s estimated that less than a quarter of all short sales actually get to closing. It can be a frustrating process so no matter how perfect a home seems, don’t start picking wallpaper just yet. You may also want to distance yourself emotionally from the house pending the results of the inspection. Purchasing a short sale home may come with more repairs and renovations than you can afford or want.
With these tips, you should be on your way to a much easier short sale, confident in your new home buying savvy.
Here are some other resources we think you'll find useful:
20 Cold, Hard Facts about Real Estate Short Sales by Lynn Pineda
What You Need To Know About Buying a Flipped House by Ferris Property Group