If you’re a house hunter on a budget or in an area with low inventory, a short sale property may be a great deal for you, if you know what to expect. Here we’ll give you the rundown on what a short sale property is and what to expect should you decide this type of house is right for you.
Short sale properties are sold for less than what’s owed on the mortgage loan. It’s a provision for homeowners who can’t afford their mortgage payment, and it’s a way for these borrowers to avoid foreclosure. It’s actually a win-win for owners and lenders, as foreclosure proceedings are costly for mortgage lenders, and although a short sale negatively impacts a borrower’s credit score, the damage isn’t as severe as a foreclosure.
- Short sales are sold as-is, and in many cases, these homes need a lot of work. Because the previous owner had financial hardships, he or she probably didn’t have resources to keep up with home maintenance and repairs.
- Not every home qualifies for a short sale
Some home sellers don’t fully understand how short sales work, and they might list the house as a short sale before getting permission from the bank. Before bidding on a short sale, speak with your real estate agent so he or she can confirm that the seller’s bank is aware of the situation.
- Short sales can have a lengthy approval time
Even if you’re pre-approved for a mortgage and ready to purchase, you’ll need to be patient. Since there’s a lot of back-and-forth with short sales, it can take as long as 90 days to purchase these homes—that’s if the bank approves the sale. At the end of the day, you need the lender’s approval, and the bank can decide at the last minute not to approve a short sale, putting you back at square one.
While the buying process for a short sale is a bit different than traditional sales, these types of homes can be a fantastic investment. If you’re considering buying a short sale, contact Metrowest today – we’d love to help you start the process.