Short sales can be “bargain deals,” therefore many buyers are looking for that bargain house. But not all buyers are good short-sale candidates.
4 questions you should ask yourself before searching for short sales:
1. Are you in a position where you can wait for the lender’s approval?
The short sale process takes time, like 3 – 6 months of waiting, sometimes even longer. There are many transactions that happen during the waiting part. For instance, documents that the homeowner needs to provide for the bank, bank appraisals, people reviewing the file, and so on. If you have a deadline to meet, move on to a regular sale or a bank-owned-home.
2. Do you have a home to sell before you can purchase the short sale?
If it’s a really good deal the property may have multiple offers. If you are contingent on selling your home, your offer will be looked over to someone who has no contingencies.
One of the concerns for lenders are: Is this going to close? If you have to sell your home before purchasing the short sale, the lender will not risk the possibility of this transaction not closing.
3. Do you understand that the lender will be making the final call on price and terms?
When you put an offer in for a short sale, the first step is the seller to accept the offer. However, it is not the seller that makes the final decision. It is the lender who will determine to take the offer or not. Lenders make the decision of the final prices and terms and sellers have no control over this.
A short sale is a settlement of debt. Lenders are more interested in not losing more money.
4. Do you have extra money to bring to the table if needed?
What if the appraisal of the property is more than you offer? The lender may ask you to pay the difference. Will you have that money on hand? You need to be prepared to bring money to the table. If not, walk away from short sales.
For more real estate news on the Central Coast go to The Central Coast Realtor.