In real estate terms, a short sale means that the lender holding the mortgage on a property is willing to allow the property to be sold for less than the total amount due. A short sale requires the homeowner to get permission from the lender, and they will require a hardship letter and other documents from the seller in order to approve a short sale. The seller then must hire a real estate professional to handle the sale.
If you are looking to purchase a "short sale", keep in mind that the process is often complex and time consuming. Patience will be key. There are some things that will help you decide if you want to pursue a short sale purchase: - A seller must disclose if the home IS a short sale or likely will be due to the market value. And above all, make sure the lender has approved the short sale.
- Generally, the lender will have an appraiser evaluate the property in light of recent sales for the area to determine the market value. Therefore, you should not expect a short sale to be a fire sale, that is to say, "a steal".
- Research the prospective area and recent home sales. Compare that information to what you know about the short sale home you're interested in. The short sale you're considering may not be a great deal after all.
- Many short sale homes are sold "as is". And, since the short sale process can be lengthy, keep in mind that the home's maintenance may have been neglected.
- Get estimates for fixing a home that needs work or repair. The low price tag on a home that needs work shouldn't blind you to the cost and time that you'll invest.
If you decide to make an offer, be sure that the offer is contingent on the lender's approval, and set a specific length of time for that approval. In fact, it is a good idea to request written confirmation that the lender has received the hardship letter and other documents for approval. Occasionally, there may be more than one offer. So, be aware that you may have to come up with a "backup" offer. It is also prudent to have a professional home inspection, even though it may be an "as is" sale. Sometimes the lender will allow a walkthrough, or even home inspection prior to the offer, but you will typically need to pay for that inspection. At the least, it is a way to discover what you are buying and what repairs may need to be done.
Remember, the listing agent represents the seller's interests, not those of the buyer; therefore, you should have your own representation. Working with a knowledgeable REALTOR® will help you avoid the many pitfalls that can be encountered when purchasing a short sale. Call me at 706-685-5471 or use the form below to send an email. Make sure you're just as happy with your purchase after the close as you were before! Bill |