1 Must-Have for Buying a Short Sale
Patience. It’s a virtue, I’ve heard.
And it is absolutely the most important must-have if you are considering buying a short sale. You may be thinking, “Why? It’s called short sale! It is a short, easy process, right?” The answer to that is…sometimes yes, but most times, no. Here’s why:
A short sale is when a seller is selling the house for LESS than they currently owe on the mortgage. Sellers will have to file a hardship letter to their mortgage holder, stating why the mortgage can’t be fully repaid, along with documentation like pay stubs and tax returns. The lender then uses that information to decide whether to approve the home for a short sale. When a buyer wants to write an offer on that property, the bank will then have to approve the short sale, along with the price and terms in the offer.
This is where patience comes in. The lender can take a long time to reply to an offer. Sometimes it takes weeks. Sometimes it takes months. Here are some things to consider to help determine if buying a short sale is right for you.
Do you have a strict timeline? Do you NEED to be in a house by x date? If there is a hard deadline, a short sale might not be right for you.
Do you have additional budget for repairs? Often times, short sales are as-is transactions, so if there is something broken when you buy it, it is yours to fix.
Ask your agent to find out:
Does the seller have more than one loan on the property? If there are several loans on the property or tax liens, getting the short sale approval has to go through ALL lien-holders for final approval. This can sometimes push timelines back significantly.
Is the short sale being professionally negotiated by a short sale specialist/attorney? This can help speed up the timeline!
Is the price in the MLS a bank-approved price? Sometimes a previous offer will get the bank to respond with a bank-approved price but the buyer needs to back out of the contract for another reason (ie, they had a timeline and needed to find another house), if so, an approved price will often speed up the process, too!
So, what do you think?..Is a short sale for you? Or does it depend on the house?