Critical Mistakes not to Miss when Buying a Short Sale
Much like foreclosures, short sales are currently abounding around the nation as
desperate homeowners attempt to get out from under unwieldy mortgages in any way they can. While a
short sale can certainly seem like a good idea, prospective buyers should understand that a short sale
can also involve a large degree of frustration, uncertainty, delays and even possible disappointment.
Perhaps one of the most important parts of a short sale that should be understood from
a buyer's perspective is that the process can be quite unpredictable. The process of trying to close a
short sale can run the gamut from less than a month to a year or more. If your real estate agent is
inexperienced with handling this type of unique transaction, the process can take even longer. A number
of factors can affect the outcome of a short sale as well as how long it takes to close, including the
ability and willingness of the lender to move forward, possible second liens on the property, the
relationship between the homeowner and the lender and foreclosure alternatives offered by the government.
The various ups and downs of trying to negotiate a short sale transaction can be
emotionally draining. Before you even attempt to consider the possibility of buying a short sale,
you should make sure you are prepared for the realities that might involve and this can
include waiting months on end for a response from the lender. While this very well might be your dream
home, it is likely only a file number amongst thousands of other properties the bank is trying to handle
at one time.
A good agent that is experienced in handling short sales can be a valuable asset
throughout the transaction. In most situations, lenders have created a specific system and have
it in place for dealing with the volume of short sales they now face. Your agent absolutely must
be able to deal with that system and also effectively communicate with the lender in order for
progress to be made. The agent is absolutely essential to succeeding in a short sale transaction.
Most people consider a short sale because of the appeal of being able to snag a
bargain. The general line of thought among most prospective buyers is that a short sale can be
picked up for as much as 8% below the market price. This is not always the case; however. The
actual price of a short sale can depend upon your own local market. In addition, it can sometimes
be difficult to determine the local fair market value. You should always remember that in most
instances the lender doesn't know anything about the property you hope to buy. They are usually
located even thousands of miles away and they are usually only going by what the listing agent
told them the property was worth. This means that you may or may not be able to purchase the
property for a price significantly lower than you originally thought.
In addition, you must realize that the act of negotiating with a bank during a
short sale is much different from trying to negotiate with a traditional seller. In a traditional
situation you are usually dealing with one or two other people. That's not the case in a short sale.
You are negotiating with a bank. A bank that is realizing a loss on a huge scale and therefore;
probably is not in a hurry to realize further losses any faster than absolutely necessary.
Of course, all of this is not to say that some buyers have not been successful
in picking up a short sale or that they have not been able to purchase a property through a short
sale for a price below market value. There have certainly been situations like that which have
occurred. It is to say that if you are considering buying a short sale you need to make sure you
have a solid understanding of the process and the time period that is likely to be involved. If
you have the patience and the fortitude to make your way through the process and you take the time
to educate yourself and do as much research as possible, short sales can still present advantages
for prospective buyers. The real key is to make sure you go in as prepared as you possibly can and
understand that the process may take far longer than you expected.