There are many misconceptions about what a short-sale actually is and what questions Buyers should be asking when considering buying a property that is being advertised as a "short sale."
To clarify, a "short-sale" is what occurs when the Seller's net proceeds after payment of customary closing costs from the sale of a property are insufficient to pay the outstanding mortgage(s) and/or other lien(s) in full at closing.
In my experience, many Buyers in the Lake Mary/Seminole County area think that a "short sale" means that it is a "FAST SALE"...
Trust me, that definition can't be further from the truth.
Because the Seller owes more for the house than the sale proceeds will provide, the Seller's lender(s) may take several months to approve the sale to the Buyer...even though the Seller and the Buyer have each signed the sales contract. There are third party investors, private mortgage insurance companies, second lien holders, home owners associations, the local taxing authorities and other who are all fighting for a much smaller payoff than the Seller owes...it's kind of like a bunch of piranha fighting for the same piece of meat.
Here are a few VERY IMPORTANT facts that Buyers should know BEFORE considering purchasing a "Short Sale" property in Lake Mary or any other Seminole County city:
1. You many not simply "walk away" from a contract which is subject to lender or third party approval. Upon signing the contract, you are obligated to perform under the contract unless your contract stiplulates conditions in which you can withdraw while awaiting the bank's approval.
2. The lender is under no obligation to consider, respond to, approve or disapprove your contract within any specified time period. Even though you and your agent may write an offer gving the bank a "deadline" to respond, they are not obligated to do so.
3. It is possible the lender may not approve the contract, in which event you cannot buy the property for the price the property was listed at. Rather than authorizing a price they will sell at prior to the submission of a contract, the banks are waiting to get offers first and THEN deciding whether they will accept them...which means the properties you see for sale in the multiple listing service may NOT even be able to be purchased at that price.
4. The bank will continue to take offers on the property until such time that THEY agree to accept a contract. Simply put, you may submit your offer at full price for a home but the bank may decide to hold out for a higher price....leaving you without a home after waiting sometimes 30, 60 or 90 days for an acceptance from the bank.
While buying a "short-sale" might seem like a great opportunity, it's not as simple as it seems.
If you are considering a buying a home in Lake Mary or Seminole County, and are needing guidance on how to best protect yourself, I'd welcome the opportunity to meet with you to discuss the benefits and the pitfalls of short-sales.
As a full-time REALTOR with advanced training in working with first time homebuyers, foreclosures, short sales and traditional re-sales, I'd be happy to schedule a "FIND ME MY DREAM HOME" consultation to review your needs and timeline.
I look forward to hearing from you!