You’ve probably seen the “Short Sale” tag on property listings. Although it isn’t essential, this label can help you make an informed decision about whether or not to buy a home.
Buyers can be confused by short sales. There are some advantages to short-sales, but there are also disadvantages.
What is a Short-Sale?
A short sale occurs when the proceeds from the sale of the house are not sufficient to pay the mortgage. A short sale is when the homeowner cannot sell their home for less than $250,000 but owes $300,000.00 mortgage payments.
To be eligible for a short-sale, the homeowner must not be current on their mortgage payments (in default)
You can find the first blog of the series here: What’s a Short Sale?
What does this all mean for a buyer? These are the things you should know if your goal is to buy a short-sale home.
When buying a short-term deal, you should be aware the following.
This sale is unlike any other.
It could take a while…
A typical house sale is like this: You make an offer and may get a counter-offer. The contract is signed for between 30 to 40 days. You close. A short sale is another thing.
Before you make a purchase for a short-sale home, do your research.
Ask the seller where they are at closing of the short sale process. Many homeowners feel panicked and need to sell their house as soon as they can after suffering financial hardship. Short sales are not permitted for homeowners who haven’t fallen behind or defaulted on their loans.
If they don’t talk to their bank, it could become a lengthy and difficult process that stops them from being allowed to purchase the house. Your bank might be able help you find a way to keep your house.
The process could take quite a while depending on how many companies have lien attached. The process can take so long that the house may be put into foreclosure. The seller might not be eligible to sell the property in such cases.
It can also happen very quickly
It doesn’t take three months to make a decision. As the short-sale process unfolds, you should be ready to act quickly.
Short-term deals may be approved by banks. If you don’t get the financing you need, it could lead to the sale being cancelled.
You must be patient while you wait for the next step to take place.
It might not work.
A short-sale home might not sell, as we said. You can’t know what could happen so don’t buy a short-sale property.
If the property is not sold, it is possible to simultaneously view short-sale properties in order to make a decision about your next move.
A Home Inspection is necessary. This property is being sold as-is.
The property will be less than perfect if it is sold short or foreclosed. It will look less new if it has been used before.
Before you buy a house, it is important to have it inspected.
A short-sale property is one that has been sold because the seller has lost their money and doesn’t have the funds to fix or replace any appliances. You’ll get the house as it is. You will need to address any major problems.
Selling short sales is often more difficult than regular sales. Sellers who cannot afford their monthly mortgage payments might not be able to repair or maintain their appliances and systems.
You might get upset if other sellers see you selling your house. This could cause major repairs. This is less common than foreclosures, so it may be worth considering a shorter sale.
Although you can purchase a home warrantee to protect your home, most insurance policies do not cover appliances and other systems that were damaged prior to the home’s purchase.
After repairs have been completed, it is worth considering purchasing an appliance/system protection policy. Landmark has many coverage options that will suit your needs and budget.
What are the best parts of buying a short-soldier?
You don’t have to sell your house in a short sale. A short sale is more appealing to potential buyers than a regular sale.
A shorter sale can be achieved at a lower price
A house in poor condition may be sold for a lower price. The house will have a lower value if it isn’t in the best of condition.
It’s possible to quickly increase equity and sell profitably.
You can sell a short-sale property and have the property cleaned up to increase equity. Knowing that you will be making repairs to the house and cleaning it up can increase your equity. If you are a homeowner, this is something to consider.
Make a list of all the things that need to be fixed or replaced before you buy. The work involved can be figured out. You can then work your way through each item. There are two choices. If you are passionate about your home, you can sell it or keep it.
Working with a professional agent will make the process much easier.
Make sure you hire an experienced agent who has a track record of short-term sales before you list your house.
Your seller should retain a professional short-sale agent. You will be able to sell more quickly than if you deal directly with an agency.
You are buying a property for a short term and want to protect your systems or appliances after the sale. A home warranty is a good option. You could save hundreds on repairs and replacements with a home warranty plan.