The most light-hearted definition for buying a short sale might be “Even a snail will eventually reach it’s destination”. With more distressed homeowners realizing there are much better options than foreclosure, short sales are now more prevalent than in years past. Buyers, sellers and their agents have been discouraged with the length of time it takes to close escrow, but the reward outweighs the risk, assuming the buyer has the time. The majority of homes being sold today in many neighborhoods are either bank-owned or short sales. I have personally had short sales close in sixty days and others that took nearly a year. With the unpredictable nature of short sales, buyers have absolutely no control over the duration and should consider other properties if timing is important.
Experienced Realtor: Your choice of realtor could be the difference between success and failure when dealing with capricious short sales. Agents with a number of years in the business is important, but more importantly, how many successful short sales they have been involved with in their career.
Deflated Price: The sellers choice of price is counterintuitive to their banks price desires. The seller can set the initial price, but their mortgage company will determine fair market value. Even though your offer has been agreed to by the owner, the final price and terms are subject to lender approval. Many short sales are priced outrageously low, so low that it’s unlikely the sellers bank will accept them. The price you see might not be the price you pay.
Choosing Your Home: This is where your realtors experience comes in handy. There’s a sequence of questions that should be answered before you pursue a short sale. The number of outstanding loans on the property, what lenders are involved and the total mortgage amount are critical. Your agent should have knowledge of that neighborhoods home values. If the short sale is priced $100,000 less than market value, it’s doubtful the sellers bank will even consider a full-price offer. The banks are taking a considerable financial loss, therefore all short sales are normally sold as is.
Time Of The Essence: After having your offer accepted by the seller, that’s just the first hurdle. The sellers bank will then slowly process the sellers qualifications for a short sale and your proposal. The buyer should not start paying out money for inspections and the appraisal during this period. Even though buyers have been forewarned about the long waiting period, the cold hard facts start to set in at this point. Many buyers back-out during this phase and move on to other homes. This is where your patience will be a huge asset. There could be months between seller acceptance and bank acceptance. By the way, if you are fortunate enough to get to this point, the sellers bank requires a quick close on your part. Please visit my website at www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home, scan my informative blogs and easy access to view local area homes for sale in Davis, California and the surrounding communities.