If you are in the market to purchase a home you have probably already started surfing the real estate sites to see what is out there. There are probably terms you are seeing on some of the sites or some of the homes that are unfamiliar. The market has many homes that are short sales and foreclosed homes.
I get the most questions on what a short sale is. So here is a brief explanation of what it is and what it means for a home buyer.
A short sale is a home that is being sold for less than what is owed.....or short of the mortgage amount. The home has lost value since the last refianance that the current home owners did, or it is worth less than when they purchased it. So the sellers of the home have to get their lenders approval to sell it for less than what is owed. It can be a time consuming process. The lender has to fully evaluate the sellers financial picture to see if they are truly dealing with a financial hardship or if they have any cash that can be put towards the sale of their home.
The seller may have to pay back the difference of what the home sold for and what is owed on it. In other cases the lender may forgive the debt completely or they can show that the debt was income for the sellers and they will have to pay taxes on that income when they file their next tax return.
So when a buyer makes an offer on a short sale, they negotiate first with the seller to come to an agreement on the terms of the sale and on the price. But just because they agree to it doesn't mean their lender will agree to it. The purchase agreement goes to their lender and it gets reviewied along with all of the sellers financial documents. The lender orders an appraisal on the home. An appraiser looks at other homes that have sold in the neighborhood and puts a value on the home that is for sale. Then the lender can make a decision on how much they will accept for the home. Then they either accept your offer or they counter offer what they would like to receive on the home.
This whole process can take anywhere from 3-9 months, sometimes longer, sometimes shorter.....it usually depends on who the sellers lender is. Some of the bigger banks have a good system in place and can get an answer back to the buyer in the 90 day window.
It is a great way to get a really good deal on a distressed property. Short sales typically sell for quite a bit less than other homes in the same neighborhood but you have to be patient with the process and it will be worth it in the end!
Author:Brandi Rademacher Phone: 253-224-6663 Dated: March 27th 2012 Views: 1,530 About Brandi: Brandi Rademacher with RE/MAX Realty South is the Professional Realtor who other Realtors come to fo...
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