When you search for property listings online, it is likely that you have seen the “Short Sale” label. Although this label might not be as important as other features of the property such size, number, and location, it can make a big difference in your decision to buy a home if you find one you like.
Short sales can be confusing for buyers. There are some advantages to short-sale properties, but there are also disadvantages.
What is a Short Sale?
Short sales are when the proceeds of the sale of a home do not cover the mortgage. A short sale is when a homeowner can’t sell their house for less than $250,000 and still has a $300,000.00 loan.
A short sale must be approved by the mortgage company and must not be in default of their mortgages.
The first blog in this series can be found here: What’s A Short Sale?
What does this all mean for buyers? There are many things to consider when buying a short-sale property.
Here are some facts about short sales.
This sale is totally different from a regular one.
It could take a while…
A typical home sale is like this: You make an offer, and then you might get a counter-offer. You then enter into a contract that lasts between 30 and 40 days. Then, you close. A short sale is a different thing.
Before you decide to buy a home that is being offered for sale, do your research.
Ask the seller about their current status in the short sale process. Many homeowners feel panicky and need to sell their house immediately after suffering financial hardship. If a homeowner has not defaulted on any loans, a short sale won’t be approved.
Talking to the bank about this possibility could cause a long process that could result in them losing their home. They could talk to their bank to find a solution that will permit them to keep the home.
It is possible for the process to take quite a while depending on how many companies have lien attached to the house. The house could end up in foreclosure if the process is so lengthy. The seller would not be eligible to sell the property in this situation.
It can also be very fast…
The decision can be made in three months or less. Be ready to move quickly as the short sale process moves along.
Banks may approve short-term deals. Banks may cancel sales if they don’t have enough capital.
Be patient while you wait for the next step.
It is possible that the sale does not go through
A short-sale property may not be sold, as we mentioned. It’s impossible to predict what could happen, so don’t buy short-sale properties.
If the property is up for sale, you can look at short-sale properties simultaneously.
A home inspection is required. The property is being sold as is
If the home is foreclosed or short-sold, it will not be in perfect condition. An older home will have signs of wear and tear.
Before you purchase a house, it is advisable to have it inspected.
Short-sale property is one where the seller is losing money and doesn’t have enough money to repair or replace appliances. You will receive what you see. Any major problems with the house will need to be fixed by you.
Selling short sales can cause more problems than regular sales. A seller who is unable or unwilling to pay their monthly mortgage payment will not be able to repair or maintain their appliances and systems.
Due to the emotional selling of their homes, you could end up with significant repairs. This isn’t as common as foreclosures, so a short sale might be a better choice.
Although you can buy a home warranty, most insurance policies will not cover appliances and systems that were damaged prior to the purchase of your home.
After repairs have been completed, you might consider purchasing a policy to protect your appliances and systems. Landmark has a range of coverage options that will fit your needs and budget.
These are the Best Things About Buying A Short-Soldier
A short sale doesn’t have to be bad. A lot of potential buyers prefer to sell their house in a short sale instead of a regular sale.
For a lower price, a short sale is possible
If the property is in bad condition, you could buy it at a lower cost. The home will have a lower price if it’s not in good condition.
It is possible to quickly increase equity and then sell your shares for profit.
Selling a short-sale home and cleaning it up can help increase equity. It is possible to increase your equity by being aware that you will be cleaning up the house and making repairs (which you should do if the home has been inspected).
Before you buy, list everything that must be repaired or replaced. Next, price everything. You can then work your way through each item. There are two choices: Sell your house or live in it if you love it.
A good agent can make the process easier
Before you try to sell your house, make sure to find an experienced agent who is skilled in short-term sales.
Make sure your seller is represented properly by a short-sale agent. This will make it easier to sell your property than if you deal with an inexperienced agent.
If you are purchasing a short-term deal and want to protect your appliances after closing, why not get a home warranty? A home warranty is a good investment. You can save hundreds on repairs and replacements with a home warranty plan.