Just how SHORT are short sales anyway?
Want the “short” answer?… But seriously, a short sale transaction can actually take much longer than a regular sale. First of all, what exactly is a short sale? A short sale is when a home is being sold for less than what is owed on it, i.e. the proceeds from the sale would not be enough to pay off the loan and thus fall “short.” Because the lender is taking a loss, the sale cannot take place without approval from the lender. Unfortunately, the process of getting that approval can sometimes take weeks, even months, depending on the lender.
Here are a few things to keep in mind if you’re thinking about buying a short sale:
1) Expect a wait.
These days, lenders are swamped with short sale cases and may not be able to process them very quickly. If a home is in the early stages of being marketed as a short sale, be prepared to wait. If you’re in a hurry to move, a short sale purchase may not be the best fit for you.
2) Be prepared to buy the home “as is.”
Because the home is already being sold at a loss, the lender will not be very likely to grant requests for repairs or credit (although I’ve seen it happen). Of course, you should still conduct home inspections, so you have a good idea of what you’re getting into.
3) Don’t be fooled by the amazingly low prices you see on some listings.
Homes are sometimes priced significantly lower than market value, primarily for the purpose of attracting attention. Before approving a short sale, however, the lender will run an analysis to see what comparable homes are selling for and will not grant approval if the purchase price is too low. In most cases, the final sales price may be lower than market value but will probably not be the incredible deal you thought you’d get. The best way to know what to expect is to ask your agent for the most up-to-date information about comparable homes in the same area. Which brings me to my last tip for today…
4) Find an agent who is proactive and knowledgeable.
Your real estate agent can be your most important advocate (See blog on Why Does a Good Realtor® Make a Difference?). Before you even submit an offer on a short sale, your agent can talk to the listing agent to see how far along the process is and give you a good idea of what to expect. He or she will help you navigate the complex process of a short sale and keep you informed on a regular basis. A good Realtor® can make all the difference in any real estate transaction, but this is all the more true in dealing with short sales.
So in short, (sorry, couldn’t help myself) short sales may take a little longer than one would like. But with some time, patience, and a skillful agent, buying a short sale may be one avenue for you to find your new home at a reasonable price. Happy house hunting!
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5 Responses to “Just how SHORT are short sales anyway?”
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Jean what a great explaination, we will share it with all the San Bruno real estate associates
That was an EXCELLENT post! Short sales are an option for buyers, just not one of my favorites!
my recent experience with short sale: Presented an offer at the end of March 08, did not hear anything from the lender until July 17th. Yes, only about 3.5 months. And, this is just the beginning of flow of forms needed to be signed by my buyers. So, yes, Jean, you’re absolutely right. shortsales may take longer than you expect! Let’s just adjust our expectations to match the reality!
Jean,
What a terrific write up! I have been trying to explain the “Short Sales” to my clients and the audience at my business seminar and had some problems. I just read off your page to them and they understood it. Then, some of them acted like seasoned business consultants, giving the consultation on short sales to their own clients. Keep it up, Jean! I can’t wait for your next write up.
Dr. Lee, Consultant. RF Corp.
Jean,
Great blog. You have summed up the short sale process very well!