What you Need to Know about Short Sales
Let’s talk about what you need to know about short sales. We hear about them and to some it sounds like and ideal situation, how can someone get that house for that price! Others, it may sound like a nightmare process of playing the waiting game. A short sale can be extremely beneficial to both the buyer and the seller but, can also be a slow moving process to an unsatisfying outcome. Before you develop an option for either side, let’s cover some facts.
What is a short sale anyway?
“When a homeowner ends up in a situation where they owe more on a home than it’s currently worth, and making the mortgage payments is no longer an option, it’s time to make a decision. Assuming other stopgap measures have failed, they can either let the home go into foreclosure, or they can avoid the foreclosure process and sell the home for less than they owe. This second option is called a “short sale.” Beleaguered homeowners often opt for a short sale because it has the potential to absolve them of some or all of their mortgage debt. If the lender is willing to cut its losses and let the homeowner off the hook for the remaining debt, short sales are less damaging to credit ratings than foreclosures. Why would lenders agree to accept less than they’re owed? Well, the foreclosure process is expensive and time-consuming, so they often come out ahead by sidestepping the foreclosure process and accepting a short sale as an alternative.”
In a short sale process you’ll definitely want to have an experience realtor on your side. There are many criteria and processes to compare and consider when working through a short sale that will determine how successful your purchase may be. If not done correctly you can find yourself in a downward spiral, wasting your time and the sellers. A few key things to watch for is the price, lowest isn’t always best. Has the listing agent had experience in a short sale? How many offers are currently on the property? Do you know if the listing agent has a completed short sale package from the seller? What’s next after the Seller accepts an offer? What should you know about the sellers lenders? You need to have a knowledgeable realtor on your side and your criteria for a home and your finances in order to proceed on a short sale. The goal is to find what you want and have the understand the market to know what it’s worth. If the home has too many checks against it for your specifications, move on…it’s not worth the work required for a short sale to invest your consideration. Be prepared to spend some time on this sale. Short sales aren’t “short”. Because of a lengthy bank process, they can take anywhere from 4-9 months to finalize.
“Short sales can be lucrative, but they’re not for everyone. If you’re going to purchase a short-sale home, you’ll need to be patient. Banks prefer well-qualified buyers who are ready, willing, and able to close on short notice, so you’ll want to have your financing in order. Also, the fewer contingencies you have, the better. Lenders prefer flexible closing terms when completing short sales, and they don’t want to have to wait for you to sell your previous home before the deal can go through. If you fit the bill on these criteria then you may be a good candidate for the short sale process.”
Let’s talk about your options and determine if you need to start down the short sale path for your future home. If you are ready.
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