What to Expect in a Short Sale
Posted on Jul 1 by FrancineYou’ve probably heard that there are some amazing deals out there on distressed properties. Reports of people snapping up bargains on short sales may have whetted your appetite for purchasing a home despite the troubled economy.
A short sale occurs when a lender allows a home to be sold for less than the amount owed on a mortgage loan. Selling a home this way can help a homeowner avoid foreclosure, while allowing the bank to recover some of what it is owed. A successful short sale can be a win-win situation for everyone involved. However, these transactions often come with a host of problems, so it’s important to know how the process works before committing to one. Here are some things to expect:
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The lender must approve a short sale. Even if you and the seller have agreed upon a fair price, the deal could be held up or killed if the bank balks at the price. You can make your offer for a home contingent upon the bank’s approval.
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Short sales can stretch out for many months. Despite the name, short sales aren’t known for being completed quickly. Delays can occur for a variety of reaons. Among the things that can hold up a deal are problems with the purchase price, not providing all the necessary documents and having a secondary mortgage on a home. In some cases, mortgage lenders have been overwhelmed with requests for short sales and haven’t been able to keep up with the case load.
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Not all real estate professionals are familiar with the short-sale process. To protect yourself and improve your chances for completing a deal, find a real estate agent and attorney who understand and have completed short-sale transactions.
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No matter how great of a bargain a home appears to be, do not make an offer until you do a public records search. This will allow you to see who holds the title to a home, whether there is a second mortgage or whether a foreclosure notice has been filed.
You certainly can find a great deal on a home through a short sale. But make sure you are fully committed to the process and have the time to wait for a deal to close.
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