Considering buying a Short Sale?

Anyone watching the active listings of homes will see the abundance of  “Short Sales” available.

So what are they?

  • A short sale is where the seller owes more on their home than the current value and they are asking the bank to be ‘shorted’ the funds due them.

And what’s the deal…

  • Any offer must also be accepted by the Bank(s) holding the loan(s) on the property
    • Banks are slow to respond (could be months and months)
    • Bank must determine if it is in their best interest to do a short sale (is there mortgage insurance on the existing loan?)
    • Bank will determine at what price/value they will accept an offer (could be an amount greater than the asking price)
    • Bank may choose foreclosure over short sale
  • It is an “as is” purchase – (no repairs will be done by the seller)
  • The seller is not allowed by the bank to contribute any expenses regarding the closing (to pay for a home warranty for example)
  • All parties must agree to the terms, buyer, seller, and bank(s)
    • If the seller does not agree with terms from bank – they can cancel
    • If the seller has excessive tax implications that they learn about – they can cancel
  • And many more items to consider

And yet they could be a good deal for the person who…

  • They sell for near foreclosure prices, and sometimes less
  • is not in a hurry with no time frame requirements to meet
  • Realizes the “list price” may not be the sales price and is prepared to raise their offer beyond the list price.
  • has the patience of Job