In particularly hot housing markets, buyers may find they need to expand their home searches to include distressed properties, such as short sales. When inventory is low, incorporating distressed housing can help increase buying options, and in some cases, even score a great deal. Here we’ll take a look at short sale properties, what they are, as well as the advantages and disadvantages of buying this type of property. Is a short sale right for you? Read on to find out.
What is a short sale?
A short sale occurs when a property is sold at a price lower than the amount the homeowner owes on the mortgage, and the homeowner’s mortgage lender(s) agrees to the “short” payoff. A lender might accept a short sale with the property worth less than the balance of the mortgage, if the borrower cannot continue to make the monthly loan payment, does not have enough money to pay back the full balance of the loan and needs to move out of the property.
Benefits of buying a short sale:
The biggest benefit to buying a short sale is the price. As a buyer, you’ll secure a property at a fair market value and avoid having to deal with the risks that can come with buying a foreclosure.
Drawbacks of buying a short sale:
The short sale process may take more time than a traditional retail sale to complete and it may be difficult to pin down a firm closing date until the seller’s mortgage lender(s) agrees to the short sale. If you’re bound by a specific timetable to buy a home, the short sale may not be an ideal route.
Additionally, short sales are often purchased “as is” basis, meaning you won’t have the opportunity to negotiate for the seller to make repairs. If you go the short sale route, make sure to account for enough in your budget to make necessary repairs or upgrades.
If you’re interested in checking out short sale properties, the first thing you should do is find an agent who’s experienced with these types of sales. Metrowest specializes in distressed properties – give us a shout today, we’d love to help you start the process.