Denver’s housing market can be tricky to maneuver. Sale prices are up, and while inventory is climbing a bit, options for first-time buyers here may seem slim. The good news is there are ways to expand your search options if you’re willing to consider distressed properties in the area. One of the most common types of distressed properties is known as a short sale. But what is this type of listing and is it right for you? Read on to find out!
What exactly 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 agrees to the “short” payoff. We’ll explain later how the “short” in short sale does not pertain to the closing time. 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 and doesn’t have enough money to pay back the full balance of the loan.
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 and challenges that can come with buying a foreclosure.
Drawbacks to consider:
The short sale process may take more time than a traditional sale to complete, and it may be difficult to pin down a firm closing date until the seller’s mortgage lender agrees to the short sale. If you’re working with a specific home-buying deadline, the short sale may not be the best choice for you.
Also keep in mind that short sale homes are often purchased “as is” basis, meaning you won’t have the opportunity to negotiate for the seller to make repairs. You’ll still be able to have a thorough home inspection, but 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 knows these types of transactions inside and out. Metrowest specializes in distressed properties – give us a shout today, we’d love to help you start the process.