What to Expect in a Short Sale
Posted on July 01 By Francine Huff
You'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:
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.
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.
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.
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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