Basic Information About Short Sale Homes
Even though the basic premise is quite simple, the world of real estate can get pretty complex sometimes. In many instances, homes for sale arenâ€™t just homes for sale, and there is more to it than meets the eye. Sometimes the special circumstances are brought on by the buyer, sometimes itâ€™s the seller and sometimes the lender. One such instance is known as the short sale. Short sale homes donâ€™t come along everyday, but when they do it can be a very intricate situation.
What Is a Short Sale? Basically, a short sale is a situation where the seller is having difficulty with the mortgage and wants to sell his house for less than the balance remaining. The reason that a seller would request a short sale is to avoid full foreclosure on the home.
Who Benefits? In a short sale, all three participants may stand to benefit once the deal is done. • The bank benefits because they don’t have to incur the time and expense of repossessing a house. • The seller benefits because he can avoid any negative credit consequences of foreclosure • The buyer might end up benefiting by being able to purchase a house for less than market value.
Buying a Short Sale Property Buying a short sale property is not like buying other homes for sale. In reality, it is like making a traditional home purchase, although the bank has to approve the sale so it can also seem like youâ€™re buying it from the bank even though that isnâ€™t the case. The reason the bank needs to approve the sale is because they are the ones taking the loss from the sale being less than the amount owed to them. In a normal transaction, only the seller would have to approve the deal.
Buying cont… While you may end up getting a break on the price, you will likely have to accept the property ‘as is’. Neither the bank nor the seller will be in the position to make any repairs, so even with a home inspection you’ll probably have to take it in its present state. And since the bank is already taking a loss, don’t expect a reduction in the price if any inspection reveals problems.
Get Ready to Wait One quality that really comes in handy with short sale homes is patience. A bank might take up to several months to process and respond to a short sale request. With traditional homes for sale, the wait time can be less than a day if the seller likes your offer. Sometimes, giving the lender a deadline to provide a response can reduce your wait time considerably.
Things to Consider Here are some things you may want to consider if you are thinking about buying a short sale property: • In some cases the buyer is getting a house below market value. • in some cases the bank has done a market analysis ahead of time and won’t accept anything lower than market value. • in some places, the seller must pay the bank the difference between what he owes and the sale price, so his goal is to get the highest price possible.
More Considerations • Unlike many bank-owned properties, a short sale home is less likely to be damaged or ransacked. • It’s wise not to assume that the house is a great deal just because it is a short sale property. Do your own research and analysis to ensure you’re getting the deal that you think you’re getting.
How to Make It Work Here are some tips for making a short sale work: • Find an agent that has experience with short sales as well as other types of homes for sale. • Make sure your agent is ok working a short sale and the extra work it may entail. • Find out if the listing agent is experienced with short sales. This may speed the process. • Make sure the short sale is lender approved. • Word your offer in such a way that you can back out if you find a better deal while you’re waiting for a response.
References John Procenko Real Estate is a Markham Real Estate agency. For current listings, visit http://www.procenko.com/. They are located at 165 Main Street Markham North Markham, ON L3P 1Y3 (905) 472-7155.