Short sales have almost become synonymous with buying a home these days. The better part of homes on the market today are listed as Short Sales and that doesn’t seem to be changing any time soon. Many home buyers find the inventory of quality “equity sales” to be in such short supply that they have no other recourse but to pursue buying a short sale home. This can be good and bad.
So what can one expect to find in a short sale? Lots, so fasten your seat belts for a quick tutorial that should put you on the super-highway of homebuying and get leaps and bounds ahead of the competition. Because knowledge is power!
First, its important to understand the sellers perspective leading up to putting their home on the market. Odds are, like so many others in this economy, they are suffering a hardship and putting their home on the market as a last resort to foreclosure. This could be due to when they bought their home, job loss, whether or not they took money out, job transfers, family matters, etc. and due to market conditions they just can’t sell their home for what they paid for it. In short, they are stressed out.
Second, tied to the previous paragraph, homes might be in a distressed condition. Meaning, the home might be in good shape structurally, but aesthetically it could use some TLC. So it’s important to understand that you are going to have to put money into the home to bring it up to market conditions. Therefore, it stands to reason that an equity sale can carry a premium when you consider there is no bank approval wait time, likely there are not as many things to fix and contract to close timeline is typically 30-45 days.
Third, if the sellers determine you are the highest and best offer, bank approval can take upwards of 60-90 days. That said, banks have gotten much more streamlined and I am seeing vast improvements in bank approval times. Bank of America, for example, has recently adopted the online Short Sale submission system known as Equator that promises an answer back on an offer within two weeks. Equator is a website that allows real estate agents to interface with bank negotiators and upload the various documents and financial information they need to approve or disapprove an offer. It’s a fantastic system and one that I see more banks adopting in the near future. Regardless, home buyers should go into the transaction with a lot of patience when it comes to short sales. If they are facing a particular time horizon, buying short sales can be a difficult process to stomach. Particularly if the deal falls through last minute and/or the home goes to foreclosure after all.
I hope the above was helpful in broadening your understanding of short sales. There certainly is a lot more to cover on this topic, but please come back as I plan on writing much, much more on this subject. You might also try visiting my website and clicking on any of the related articles. As always, you can call me with any questions at 916-838-5752 or email me at firstname.lastname@example.org.