What is a Short Sale? Pros and Cons of buying a Short Sale Property
Anchorage, Alaska Real Estate
What is a Short Sale?
A short sale is when the proceeds of a property is less than the lien amount. In other words, the proceeds of the sale fall short of the total amount owed to the bank (lien holder) and the lien holder agrees to release the real estate for the lesser amount because the homeowner cannot afford to pay the mortgage. A short sale is often a popular alternative to foreclosure. Most short sales are done through a third party, usually a Real Estate Professional. In most short sale cases, homeowners are facing a financial hardship and have to prove their hardship to the lienholder.
Pros of a Buying a Short Sale:
-The biggest advantage of buying a short sale is PRICE. Short sale listings are typically listed below market value which provides a buyer great opportunity to purchase a home with intant equity.
-Short Sale Listings tend to be in better condition than Foreclosed Homes.
Cons of Buying a Short Sale:
-The biggest disadvantage of buying a short sale is TIME. Short sale buyers must be patient because third party (lienholder) approval is required after the seller has accepted an offer on their home.
-The Home is ususally sold As-Is.
-There are no guarantees that the home buyer will get to close on the home, even with months and months of waiting.
Every short sale situation is unique and every negotiator for each short sale is unique so it's hard to predict the outcome of these sales.
The best way to go into buying a short sale is to NOT get emotionally attached to the home. And although I discourage my buyers from looking at a home purchase purely for financial reasons... it is almost encouraged to think of a short sale in that way.
Consider how much time your family has to wait on a home and how much time you consider reasonable. Never ever put your hopes on a short sale home. Once buyers get emotionally invested in a short sale, it can be hard to make pracitical decisions which can affect your ability to do what is best for your family.
Some questions to ask the listing agent:
1. How far along are you in the short sale process?
2. Has the bank approved a certain listing amount?
3. Has any paperwork been submitted to the bank?
4. Is there a foreclosure sale date set?
5. Is the seller willing to do repairs?
Good luck to you and your family in this exciting time in your life!!! Happpy Home Hunting!