Short Sales and Foreclosures in Johns Creek Georgia Part One
Are you thinking of buying a short sale or foreclosure property? You may be wondering which one is the best way to go. Here are some commonly asked questions that can help you decide if buying short sales and foreclosures are the way to go for you.
What is the difference between a foreclosure and a short sale?
A foreclosure is a property owned by the bank or lender who previously held the mortgage. The home owner defaulted on their loan and their mortgage holder or lender foreclosed and now owns the property. A short sale is when a home owner is "upside down", or owes more on their home than what they can net from a sale, and their lender agrees to let them sell it for less than what is owed. In short sales, the home owner still owns the home.
How much of a discount can I get on short sale?
It depends on what type of loan is in place in combination with the motivation of the mortgage holder.
Are all short sales great deals?
Some sell at fair market value, some sell at a modest discount and some sell well below fair market value.
What type of forms must I sign when I purchase a short sale?
In addition to the usual and customary purchase and sale documents, most short sales have an addendum and an extensive "short sale package" which must be submitted to the mortgage holder. The lion's share of extra documentation is signed or submitted by the seller in a short sale transaction.
Can I alter the mortgage holder's addendums or decline to sign them?
Not if you want to purchase the house. With short sales it is generally "my way or the highway" as far as the mortgage holders are concerned. If you're not willing to sign their required documentation, and follow their precise requirements in all aspects of the contract, negotiation and closing process, they will not work with you.
May I inspect a short sale property and have a financing contingency before committing to buy it?
Yes, the process is the same as with normal sellers, you may do an inspection once you have a binding purchase and sale agreement; however the banks give you a very short time for inspecting and getting your financing, usually 7 days. It is wise to be pre-approved for your loan as that normally takes longer than 7 days and you may lose a good opportunity while waiting for loan approval. In short sales, the seller usually has the utilities turned on for your inspection.
Will I receive a seller's disclosure with a short sale purchase?
Yes, in most cases. Contrary to popular belief, a seller's disclosure isn't a required document in a home sale transaction in Georgia. However, most home owners are smart enough to know that they will not sell their home without providing one. Generally, foreclosed properties, investor owned, corporate owned, and estate owned properties sell without a property disclosure.
How long does it take to negotiate and close on a short sale?
The short sale process takes much longer than buying a foreclosure or privately owned home. First you must come to agreement with the seller; then you must wait to find out if the short sale will be approved or denied by the mortgage holder. It can take several months to learn if the short sale will be approved, and to get to a closing if it is approved. Not all properties that are offered as short sales end up being sold as short sales. You may wait several months to hear a response, only to find that the short sale has not been approved. Some sellers who offer their properties as short sales don't know if they qualify to do a short sale because their type of loan product has a policy of not addressing short sale requests until they actually have a short sale offer in hand.
Must I finance the property through the bank that holds the mortgage?
No, but they may want to pre-qualify you or you may be required to get pre-qualified with a lender of their choice before they will consider your offer.
If buying a short sale property sounds like an option for you, contact me at 404-226-8484, and I can help get the process started. In the next article, Short Sales and Foreclosures Part Two, I'll answer some commonly asked questions on Foreclosures to see if that sounds like a better option for you.
Comments(0)