Short Sales Everywhere!

Short Sales are everywhere now-a-days. If you don't know what's going on with short sales, now is the time to learn!  A brief overview... 

A short sale simply means that the seller's lender is accepting a discounted payoff to release an existing mortgage. It is very important to remember that just because a property is listed with short sale terms that does not mean the lender will accept your offer even if the seller accepts it. Before a lender would even consider a "short sale," the seller would need to be in default and would have had to stop making their monthly mortgage payments. In addition, the seller may owe more on the home than the home is actually worth so a discounted price may bring the price in line with market value, not below it.

As a buyer, you may be looking to buy a property listed as a short sale because you think you will get a good deal. If you see a home listed at a price that you feel is too low for the neighborhood, it is very important to call a "Realtor" to find out if the home is listed as a short sale. You might want to think twice before making an offer on a home that is in pre-foreclosure, i.e., a short sale home.  It is not as simple as you may believe and very few close in 30 days or less.

Some of the things that should be done before purchasing a pre-foreclosed home include checking the public records. Your Realtor can find out title information, whether a foreclosure notice has been filed, and how much is owed to the lender. Knowing this information is important in determining how much you would like to offer.

Getting an experienced short sales agent will help expedite the transaction and will protect your interests. You don't want to miss an important detail due to inexperience or find out your transaction is not going to close on time because no one followed up in a timely manner.

It is important too that once the seller has accepted your offer, it must be sent to the lender for approval. A lender is not going to accept a short sale if the seller has equity in the home or has the ability to repay the difference between your sales price and the existing loans on the home. Sellers have to have provided the lender with a letter stating their hardship. There are many other factors considered in this as well as the Seller may owe taxes on that amount. The lender will want to see that you have your own loan available and that you are preapproved. It wouldn't hurt to send a preapproval letter to the lender along with the accepted offer you receive from the seller. Remember that even though the seller has accepted your offer, it isn't over until everything meets with the lender's approval.

Lastly, as a buyer of a property considered a "short sale," it is very important to always obtain a home inspection and pay for other types of inspections, i.e., roof, sewers, septic tanks, pest, and fireplace inspections.  Don't waive your rights to obtain these inspections. Your offer is contingent upon approving them as lenders will ask buyers to purchase the property in an "as is" condition, which means no repairs.