"Short Sale" properties are becoming more common in our area.
A short sale is when the seller is "short" on funds - they are selling a home for less than what is owed on the mortgage. This occurs either because the market has declined and/or the home has been refinanced and cash taken out from the home.
Is a seller owes more than the home is worth in today's market, and they need to sell, they can attempt to have their lender approve a short sale. Many lenders are now agreeing to - and approving - short sales under certain circumstances. If the alternative is foreclosure, then it may be in the lender's best interest to approve the short sale.
However, there are issues with buying a short sale property that buyers need to be aware of:
Short sale homes are sold strictly in as-is condition.
Short sale homes are not necessarily huge bargains. Lenders will have an appraisal done on the home prior to approving the sale, to ensure they are receiving fair market value for the home. Otherwise, it may be more beneficial for the lender to foreclose on the home.
Short sales can take a long time.
Let's consider that last point a bit more: Short sales can take a long time.
In ideal short sale situations - when the seller has already provided their lender with their financial paperwork and other required documents - it is still typical to wait for 4-6 weeks before the lender will even let you know if they accept your offer.
Yes, that means that you, as the buyer, will have to wait at least a month to find out if your offer will even be accepted by the lender.
So, if you're in a hurry to buy, or have a time line of when you want to be in your new home, then a home being sold as a short sale is not for you. We have no control over how long a lender will take to approve the sale and accept your offer.
Buying a short sale property is not for everyone.
Be prepared to wait. And then wait some more.
I have a client who needs to be in their new home within two months. We will not be able to consider short sale properties - their time frame for moving in is too short.
I have other clients who have an apartment they rent on a month-to-month lease. They're willing to wait for the right place to call home. For them, we are certainly considering short sale properties - they have the time to wait and are willing to do so. Because of their flexibility, the homes available to them is greatly increased to include these short sale properties.
Are short sale properties for you?
Consider your needs and your time frame. Speak with your REALTOR and make an informed decision. If you decide to move forward with a short sale home, just be prepared to be patient. We'll work through it together!
Don Fabrizio-Garcia, REALTOR
Connecticut Real Estate & Appraisals
Keller Williams CT Realty
Connecticut Real Estate and Homes for Sale