Some people love buying short sales and others aren’t so fond of it. Granted, sometimes buying a short sale can get you a great deal, but this doesn’t happen all the time. If you’re not that familiar with short sales, here are some key do’s and don’ts to help you out, should you decide to look further into short sales and if they maybe right for you.
What is a short sale?
A short sale occurs when a homeowner gets into some sort of financial hardship, wants to sell their home, but owes more on the mortgage than the house is worth. The homeowner can go to their bank with the intent to prove their financial hardship and ask for a short sale approval. The bank may indeed approve it, since it’s cheaper for the bank than if the homeowner were to go into foreclosure.
Short Sale Do’s
- Do your research
Be sure to check the public records before you make an offer on the short sale. Oftentimes a realtor can help you find out whether or not the home has gone into foreclosure or what’s owed to the mortgage lender. This will help you decide if you should pass on the deal or make a reasonable offer.
- Hire an experienced realtor
It’s best if you hire a realtor who has experience working with short sales, as they’re not the easiest way to purchase a home and things don’t always go as planned. This could save you some headaches and a lot of time.
- Get pre-approved
Have a pre-approval letter ready to send to the lender that’s been dated within the past month.
Short Sale Don’ts
- Don’t be persuaded to give money
It’s not unheard of that a seller will try to persuade a buyer to slip them some money for the privilege of buying the home. This is considered fraud with serious legal ramifications. Don’t fall for such tactics, as sellers are not typically going to receive any money.
- Don’t get impatient
Despite their name, short sales are not typically short. Offer approval and paperwork involved just take longer, so don’t become impatient when 30-, 60-, or 90-plus days go by and you’re still waiting.
- Don’t skip an inspection
Buying a home is a large investment and you want to make sure you know all of the facts before buying. In some states, banks are not required to make the same disclosures that a regular seller is so without a thorough inspection from a licensed inspector, you could be walking in to trouble you don’t see coming.
Is it worth it to buy a short sale?
It can take anywhere between two to six months for a short sale to be complete, as there’s a lot of paperwork required. Is it worth it? Those who have time to wait it out and purchase the home at a discounted rate seem to think it is worth it. Others have had problems arise when trying to purchase a short sale, such as rejected offers, the home going into foreclosure, and more.
There’s really no way to tell how a short sale will go, so it’s best to work with a realtor who is experienced with short sales and stay optimistic. There are deals out there in various niches, so it doesn’t hurt to keep your eyes peeled for short sales, along with other discounted homes.