The term short sale has woven its way into the homebuyer lexicon during the past year. While not a foreclosure property, short sale homes have their own special financial issues that require a real estate agent who is trained in this type of sale.
What is a short sale? When a homeowner is in financial difficulty, can’t keep current on mortgage payments and may see a foreclosure in the near future, the owner and the lending institution decide to sell the home for less than owed on the mortgage.
Buyers are attracted to short sales hoping to score a property at rock bottom price. That could be a misconception, because short sales are much more complicated than price. While the seller and her agent may set the listing price, the lender has final say to approve the sale or not. Dealing with two entities to buy a home can be a long process suited for buyers with patience and an experienced agent. There’s nothing short about a short sale. Here are some tips when you decide on a short sale:
- Price. Submitting a low-ball offer most likely won’t get you anywhere. Your agent will show you comparable prices in the neighborhood, which should set the tone for your offer. The lending institution has the final say in approving the sale price. If the lender feels your offer is way out of line, they may not even respond.
- Repairs. Short sales are sold as is. The home may have any number of repairs to be done, so be in the fixer-upper state of mind. Whether you’ll be issued a credit is up to the lender. Another way of thinking is that you are buying a home below market value and that gives you the financial leeway to make repairs.
- Financials. You and your agent can perform a search on the property to see if the owner has more loans than the mortgage. The more debt, like a line of credit, the more complicated the process becomes.
- How long? Short sales take a long time. If you don’t have the patience for that, continue looking for properties with your agent that may be easier to purchase and offer what you want in a home.
Short sales can result in amazing properties and a commitment to a very special home. With a generous dose of patience and attention to detail, plus a trained short sale agent, you very well may purchase your dream home.