As a home buyer you should be aware that there are homes that you can buy as a short sale property. You probably have heard of “short pays” and “pre foreclosures” properties. These properties are considered short sale properties however they are termed. These properties or homes are upside down on their mortgages and the owner wants to avoid foreclosure, and they are trying to make a deal with the lenders or banks.
In a short sale property, the lender or bank agrees to a settlement with the owner in a lesser amount of the mortgage. In this manner, the advantage goes both ways. For the bank, it will eliminate the process of foreclosure and repossession; banks do not want to through this process as much as possible because of its expensive and time consuming process. And banks are not in business of home selling or housing business. For the owner, it will be good for him or her to avoid foreclosure since this can ruin his or her credit standing; most of us knows what it means to have a bad credit standing; and worse, bankruptcy.
If you are a determined short sale property buyer, you should be aware of the following:
When it is a short sale, the owner of the property is not the bank as compared to a foreclosure. But because of legal reasons, the bank must be the one to approve the sale before the owner seller sells the property. The loss in this case will be the banks’ and not the seller’s. It will appear as if the bank is the seller of the property. One reminder for short sale property buyers though, this kind of deal can be very demanding on the buyer’s patience and time compared to foreclosed properties deals.
When you buy a short sale property the contract’s terms and conditions will be subject for approval by the lender or bank; in a regular sale the seller has a direct hand on the terms and condition of the contract.
The property’s condition is “as is” in a short sale. There is however a stipulation in the contract allowing the buyer to forego the deal if there are major problems with the property at the time of inspection. A reminder for buyers: banks or the lender will not compromise with the price for repair purposes. And, it is likewise not expected that the buyer will shoulder the additional cost for repairs. Worse thing can happen is that the buyer will end up needing more money for closing costs.
When bidding for a short sale property, a buyer must be ready to be patient enough. Banks usually are sluggish in responding to short sale offers and bids. It may take several months before a response can be received. One thing a buyer can do though is to give a deadline for a response to his or her offer or bid. Even with this deadline, sometimes a response can be received for several months because it is not always a smooth sailing with the seller and bank to strike a deal for a short sale.
As a short sale property buyer, you should not assume that you are getting the best deal on the sale. Make a thorough study of the market and give it a serious analysis.
Keep in mind that banks will not likely want to lose on any short sale or on any transaction for that matter. As much as possible they will want to sell the property at a fair market price or even as close to it. If you have better options on other property, it is best that you take it.
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