With the housing market so tight and so expensive, every would-be buyer is looking for a bargain. That has more people than ever interested in short sales.
A short sale refers to a situation where a homeowner is no longer able to afford their mortgage and the bank has agreed to permit them to sell the home for less than they owe on their mortgage, rather than taking the home in foreclosure. While you can get a bargain that way (and the home of your dreams), short sales can also be difficult. There are a few things that you’ll what to keep in mind if you’re thinking about pursuing property ownership in this way.
They’re not for everyone
Short sales can be hard to find in a strong market, and there’s typically a rush to “beat the bank.” That means that there’s usually only a small window of opportunity where the seller can try to find a buyer before their mortgage holder proceeds with a foreclosure anyhow. If you can’t stand the uncertainty of the process, then a short sale might not be right for your needs.
They can be harder to finance
Even if you’re pre-approved for a loan, you may not be able to get financing for a short sale if the property is in bad shape. While property that’s going through a short sale is still typically owner-occupied (which means it probably doesn’t have the same issues that you might find with a foreclosure that’s been sitting empty for a while), the owners may not have had the means to keep up with repairs. If a home doesn’t pass inspection, you may not get a loan.
The bank can drag its feet
The short sale process can be tremendously complicated, especially since the bank – not just the seller – has to agree to the sale. That can make it hard to negotiate for a better price, and you can end up waiting for what may seem like a long time to get final approval on your deal.
It’s always best to seek experienced legal guidance if you’re contemplating buying a property through a short sale. That can keep you from making any major mistakes and increase the chances of a successful purchase.