Tips on Buying a Short Sale Home
There are many horror stories on the issues that arise when trying to buy a short sale home. Many times the stories are unfounded and are generated by agents that do not understand the short sale process and getting the system to work properly.
A short sale listing, is a home that is being sold for less than the value of the outstanding mortgage, or shortage. The process will start a couple of weeks prior to the home even being listed on the market, as the listing agent needs to sit with the sellers and make sure all avenues are taken to avoid a negative response from the banks.
For the buyer of a short sale listing, a certain degree of patience is required in addition to an appreciation that the home will be selling as is. This is always the case as the sellers not only do not have the funds to continue paying their mortgage, but also not enough money to do repairs, simple or otherwise. The big advantage is that a buyer will get a home within market value, or sometimes even lower without having to wonder what may have happened to the home if it were foreclosed and possibly vandalized.
A simple conversation between the listing agent and buyer's agent will allow all to get an understanding of what has been done to get the property owner and the bank on the same page.
Just because the property has been identified as a short sale doesn't necessarily mean that the buyers' low ball offer will be accepted by either the sellers, who have first review of the documents, their agent, or the bank. The fact that the bank will accept the shortage, doesn't mean they are agreeing to bargain basement pricing.
Once the offer and all documentation have been submitted to the bank, the bank will then arrange for an appraiser to go out to the home and get an independent evaluation and sometimes even send out an appraiser. Once this documentation is returned to the bank, and all is acceptable, then the bank will expect a quick resolution to the sale.
A buyer on a short sale must be careeful about makig cintigencies in their contract that they will not process their part of the transaction, including inspections until after the bank makes their position known. This could result in them losing the deal, as a bank response to a short sale is not unlike the bank's response to a foreclosure in that they will not allow the deal to extend beyond a 30 day window. They then need to move without hesitation once the release is given.
In a conventional home sale, the buyers make contingencies with time-lines that begin once the contract is signed by all parties. These time-lines allow for the mortgaging process and home inspections and takes a transaction out from 30-45 days. With a short sale, it would be wise to add at least 3 weeks to that time-line, assuming the listing agent has done their advance work properly.
A short sale can be a great deal for all involved, as the seller gets out from under their obligation with minimum liability, the buyers get a home in good condition at a discounted price and the banks do not have to worry about having the non performing assets on their books.
Short sales transactions are not that difficult if all know the issues up front. As with any real estate transaction, the buyer needs to have their finances all resolved in advance, and a pre-approval letter is the ultimate.
If you're thinking of buying a short sale property in Central Connecticut, call me for assistance at 203-206-0754.
If you think you need to sell your home as a short sale in Central Connecticut, call me for a meeting.
Short sales do work and I know how to make them work!
Tips on Buying a Short Sale Home!
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