Benefits and Risks of Buying Short-Sale Homes
When it comes to home buying, short-sale homes offer the chance to purchase a property that is listed below market value. These homes are placed on the market at a very attractive price to attract prospective buyers before a home goes into foreclosure.
Short-sales allow mortgage lenders to recover funds from buyers who can no longer afford their mortgages. It’s a way for a seller to get out from under all or most of their debt, and lenders can get as much money they are owed as possible.
This guide will walk you through the short-sale process, so you know what to expect if you move forward with trying to purchase a short sale home.
Real estate short-sales involve selling a home for less than the balance remaining on the mortgage. Before the process can begin, the mortgage lender must agree that it’s time for a short-sale.
The lender will require documentation that explains why a short-sale makes sense in this case. If the lender agrees, then the house will go on the market. Once sold, the moneylender will recoup some or all of the debt owed – or you may have to pay a certain portion to the lender to be released from financial obligation.
The truth is that short-sales take a great deal of time. The primary lender and any lienholders tend to take their time negotiating and closing the deal. Sellers can also cause delays because they either regret their decision or don’t have the right paperwork.
To make the process as smooth as possible, buyers should take a few essential steps.
Finding a Short-Sale Home & Getting Pre-Approved for a Loan
If you are in the market for short-sale homes, it’s smart to get a real estate agent involved who is familiar with the process. They can not only help you find a short-sale home within your desired budget, but they can help you navigate all the complex paperwork involved. It’s also smart to get pre-approved for a mortgage loan, so you’re ready to take action.
When You Make an Offer
When you make an offer, remember that the property is already offered below market value. If you are interested in the home, make sure your offer is competitive. If the seller considers your offer, they may try to negotiate the price with you. Also remember that you’re buying a home in “As-Is Condition,” so you may have some unforeseen repairs or costs.
Negotiate Short-Sale & Contingencies
Ideal buyers for short-sale homes come to the table pre-approved for loans and don’t have any contingencies, like the sale of an existing property. Once the buyer and seller agree on terms, the moneylender must also agree to the sale for it to move forward with closing.
How Long Does a Short-Sale Take?
Closings for a short sale take more time than conventional transactions, and the time it takes can vary greatly. In an ideal situation, it takes 60-90 days on average, but it can take 120 days or as much as a year. Again, buying a short-sale home requires patience, and the ability to be flexible with timing. If you need to move in ASAP, a short-sale home probably isn’t the best choice.
Mattingly Ford Title Services
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