In general, a short sale occurs when a property is sold at a price lower than the amount the homeowner owes on the mortgage then the homeowner’s lender agrees to the “short” payoff. Usually, a lender accepts short sale of a property worth less than the balance of the mortgage. If the borrower won’t be able to fulfill monthly loan payments and has undergone series of investigation to make sure they qualify for one, then they start the process of completing the documents and moving out of the property.
The short sale process might be the best option for both the borrower and lender to avoid foreclosure. Homeowner can walk away with less impact on their credit score and for the lender to mitigate its losses by avoiding foreclosure and reselling the property. While this might be convenient for both parties, there are certain pitfalls in buying a short sale property and so does for the buyer to go through a snail-pace purchase process. What can a buyer expect in buying a short sale?
Compared to traditional property selling process, short sale may take more time to complete the sale. Though buyers may benefit from purchasing the property at a fair market value, it might be challenging to those who are hitting a close timeline since there may be more “roadblocks” along the way. It is always wise for buyers to get an experienced short sale realtor who can help them out with the process. One of those pitfall on this process that may cause delay would be a possible junior lien and other special assessment liens attached to the property. These needs to be negotiated first and they must all agree of the short sale before the sale takes place. The property also is bought on an “as-is” basis. Also expect a higher closing fees, buyer might shoulder the cost of inspections and repairs. Sellers can impose delay also if they are uncooperative in submitting all required documents – this commonly happens if seller is reluctant to move out from their home or simply they aren’t able to come up with their “share” or “contribution” at closing which in the end the buyer might make it up for them.
Different from foreclosed properties, one advantage of a short sale property is that they are of better living condition. These property are less trashed, vandalized or ransacked. Though there are deferred maintenance issues due to financial constraint of the home owner, they are less likely to destroy their home while they are still living on it. Never assume that the property would be of great deal, it is best for you as buyer to do your own research about the property, its comparable market price and history.
If you are planning now on buying short sale, here are a few tips: Be patient. Be cautious. Be wise and get a Professional Realtor experienced in Short Sale Process. It might take up to several months, always remember that this already is a good deal for you and will occasionally close successfully.