Buying a Short Sale Home
If you have the time and patience to wait on the process of a short sale, you could purchase a home below market value. Keep in mind that not all short sales are listed below the market. They are typically sold at a loss for the lender. This means that the market may have been higher in the past and the current owner is "under water". It is very important to know the market value of an area and neighborhood before assuming that a short sale (or even a foreclosure) is good value. You might be better served by purchasing a home from a motivated seller with tons of upgrades! Many homeowners who are struggling to afford their monthly mortgage payments are now entering into that short sale. With a short sale, the owner typically remains in the home and agrees to keep it up, allow showings and the mortgage lender agrees to take a lesser amount than what is owed on the home in order to avoid foreclosure. There are homes on the market now that are short sale homes. Buyers do need to know the pros and cons about buying a short sale home.
Short Sale Advantages
Prices for short sales are typically lower than other comparable homes within the market. This is because the lender needs to sell the house in order to recoup the money they loaned to buy the home, and the seller wants to sell the house to avoid foreclosure. The biggest advantage to the short sale is getting a bargain on your home. Short sale process takes a longer time to complete, many buyers put in an offer on a short sale but many walk away during the process. If you are willing to wait, this can be an advantage.
Short Sale Disadvantages
The biggest disadvantage to the short sale is that they can take several months in many instances to complete, and that during this time period, other buyers may become interested in the short sale property, too. Also, most of the short sale process is dependent upon certification by the lender. Depending on the bank and state, many lenders are not willing to accept low offers on the property. Buyers are often turned down if the offer is not up to the expectations of the lender, even when the listed price for the house has been met. Many times, a short sale listing price is ridiculously low, and the lender ends up now approving it, which is a frustrating and misleading to potential buyers who are looking for a short sale. The low price usually creates multiple offers. This can be frustrating for serious home buyers. Short sale properties are usually sold `as is`. It is important to make sure your "Option Period" is negotiated with your contract prior to signing.
If you are considering buying a short sale property and need guidance, or if you are a homeowner considering short sale of your own property, please contact us. We have worked with Buyers and Sellers with these types of contracts and can offer you guidance through the process. Call or email us...we're ready to help you!