Are you looking to buy a home? Are you thinking that now’s a great time to find bargains? That’s true, but it pays to know a little about seller’s situation before you make an offer.
If a home is being sold for below what the current seller owes on the property- and the seller does not have other funds to make the difference at closing-the sale is considered a SHORT SALE. Many home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.
Short sale is different from a foreclosure, which is when the seller’s lender has taken title of the home and is selling it directly. Homeowners often try and accomplish a short sale in order to avoid foreclosures. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.
You’re a good candidate for a short-sale purchase if:
You’re very patient– Even after you commit to an agreement with the seller to buy the short-sale property, the seller’s lender has to approve the sale before you can close the deal. This typically takes about 2 months if there is only one mortgage on the home, if there are more than one mortgage, prepare for a longer closing.
Your financing is in order– Lenders like cash offers. But even if you can’t pay all cash for a short-sale property, it’s important to show you are well qualified. If you are preapproved, have a large down payment and can close at any time, your offer will be viewed more favorably than a buyer whose financing is less secure.
You don’t have any contingencies– If you have a home to sell before you can close on a purchase of the short-sale property-or you need to be in your new home by a certain time- a short-sale may not be for you. Lenders like no-contingency offers and flexible closing terms.
If you are serious about purchasing a short-sale property, it is important for you to have expert assistance. Some people you may work with on this purchase are an experienced real estate attorney, qualified real estate professional, or a title officer.