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What is a Short Sale?

Posted on 09/20/2017 in home buying

When you’re shopping for a vacation property you will likely come across terms like Short Sale, ROI, and Foreclosure Property.

A short sale is where the seller has informed the lender they cannot make their mortgage payment, has proven a hardship as to why they are or will be in default, owes more than the home's market value, and has no other assets available that they could liquidate. If the lender agrees to accept less than the amount owed on the mortgage to satisfy the loan, the property can go up for sale in a Short Sale status. This is a process that homeowners and banks agree to in order to avoid foreclosures.

Is a Short Sale a Fast Way to Buy a Home?

In short, the answer is no. A short sale does not happen in a short amount of time. But, if you have patience, access to sound legal advice, and are willing to take on some home repairs, a short sale listing may be your way to pay less on your next home. If you are looking to close on a home in 30 days, this is not an option for you. Any offer placed on this type of listing needs to be accepted not just by the seller, but by the seller's lender too.

The uncertain time frame of a short sale usually works best for buyers who are renting and have flexibility in when they close or a buyer in search of investment properties or second homes.

Other Things to Know About Short Sale Properties

It’s important to have an attorney look at the short sale agreement so you are clear on what you are buying and the process involved.

Our real estate agents can research and find out who holds the title, if a foreclosure notice has been filed, and the balance owed to the lender(s). This will help you when you’re ready to make an offer on the home. Keep in mind that a short sale means the seller's lender is accepting less than what they are owed to release the mortgage, but they want to make as much of their money back as possible. Your agent can send along a list of comparable property sales records that support the price you are offering to pay for the home and help close the deal.

Have Your Own Inspection Done

Since the lender is accepting a loss, they will usually not pay for inspections, repairs or home guarantees on the property. This means you should hire a home inspector yourself. Don’t skip this step! You’re basically buying the home in “as-is” condition and often there are things only a professional home inspector can uncover.

Be prepared to be wait; some lenders can make a decision in two-to-three months, while others may submit offers to committee, which can take longer. Our agents will maintain contact with the lender regarding the status of your offer and keep you informed every step of the way.

A short sale can be an option for a patient buyer hoping to buy an affordable home for sale. Taking on the challenge with an experienced real estate agency like ReMax at the Beach will make the deal go smoothly and as quickly as possible.

 

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