There is a difference between short sale homes and foreclosed homes. Due to personal financial crisis, home owners (with mortgage) want to sell their properties before forfeiting the title to the bank (foreclosure) , so the seller may negotiate with bank about short selling, meaning the home will be sold at a lower price than the balance of debts secured by property liens, if agreed, the lien holder will release the lien and accept the lower price.
Short sale homes can be a good purchase because it is lower than the market price, however, before buying short sale home, you need to look at a few things.
1. Short sale homes usually takes longer time to process. The original home owner may have more than 1 debtors, even if the short sale price has been agreed between you and the home owner, it still needs to be approved by the lender. It can take more than 4 months for their approval if more than 1 lenders involved.
2. Depending on the competitions from other potential buyers, usually cash transaction is preferred by the bank for their approvals (if there are good competitions from other buyers).
3. You are not restricted by any hold-backs. Banks usually prefer a buyer without no restrictions, can complete the transaction any time and ready to own the home. So don’t appear to have many dependencies in your ability to buy the home (wait for relocation, wait for having more savings etc.)
4. Not all the short sales are approved by the bank, in fact less than half. Therefore, consider getting a good real estate attorney as part of the negotiation will help increasing your chance of having short sale application approved by the seller’s lender.
5. Work with Realtor that have extensive experience in dealing with short sales, this again increase your chance of getting the deal and less headache dealing with negotiation and documents.
6. Ask your Realtor to refer you to title experts. Short Sale homes can have cloud in the title, so title expert will make sure the title of the property is thoroughly researched including any liens. Knowing the title report in advance will save you time and energy to pursue the right thing.
7. Bank can potentially refuse your offer or give counter offers. Your offer is not a sure thing.
8. Bank may change terms on the contract,at anytime, this creates variables in your decision.
9.You are likely to purchase the property as is, its very less likely that the home will be renovated or fixed before selling.
