We’ve all heard about short sales in today’s market. While lots of buyers are intrigued by the chance to get a home at a big discount, it’s not the way to go for everyone. There are a few things you should keep in mind if you’re considering buying a property in a short sale transaction.
There is nothing short about a short sale. The “short” in the name is a reference to the mortgage lender’s willingness to accept less money for the home than they are owed, not to the time period from offer to closing. An offer to purchase a short sale must be accepted by the seller AND approved by the lender, which can add months to the process. If more than one mortgage lender has an outstanding loan on the property, or if the property has other liens attached to it, things get even more complicated and take even longer. In other words, if you have a home to sell before you can buy, or you have to close on your new home by a specific date, a short sale is not for you.
Inspect carefully. Sellers in financial difficulties often attempt short sales as a last resort before foreclosure. In many cases (but not all), a seller in financial trouble hasn’t kept up with the maintenance of their home, so the buyer could be on the hook for expensive repairs. Pay particular attention to the results of your home inspection, and be prepared for the fact that a major defect uncovered in the inspection process probably won’t result in a price reduction. Since the mortgage lender is already taking a loss on the property, they aren’t usually inclined to reduce the price even further due to any needed repairs.
Call in the pros. An experienced real estate attorney is always a good person to have on your side in a home purchase, but especially in a short sale. Many short sale offers are rejected or countered by the lender, and having an experienced professional negotiate on your behalf is a great way to improve your chances of getting to the closing table successfully.
That said, if you have flexibility, funding, and patience, a short sale can be a great option. Ask your Realtor® about short sales near you!