Facts About Buying A Short Sale Home

Anyone wanting to buy a home should learn the facts about buying a short sale home. Buyers can get desirable properties at reduced prices. However, the process is quite different from finding and making an offer on a home through a traditional real estate listing. The circumstances are different and the process may be longer.

When individuals or families are having difficulty making mortgage payments there are sometimes options that help the family save their credit rating. A short sale is one option the bank or mortgage company may approve, depending on how much is owed. When the financial institution approves home sales this way they are basically agreeing to a settlement amount. The homes are then listed through real estate agents like other homes, but with a specification of a short sale.

Families who want to maintain good credit standing but can no longer keep up with mortgage payments may ask the lender for a settlement amount. Often the settlement amount is much less than what is owed. This means a buyer can find a suitable home in a desired neighborhood for less than comparable homes. There are some drawbacks to purchasing a home through this type of sale.

Buying a short sale home often means the buyer must wait to close. It is rare for such a home purchase to close in less than thirty days and the process usually takes much longer. Many can take up to six months. Many homes purchased this way are sold as is. The financial institution will not be willing to make any repairs or upgrades, because it is trying to recoup as much as possible for the loan.

Always find out how much is owed on the home and how many mortgages are outstanding. A home sold in this manner may be priced similarly to others in the area. This is especially true for homes that have dropped in value or when previous owners have taken out a mortgage with an unusually high interest rate.

Be prepared to pay above the asking price. Buying a short sale home does not mean it can be purchased at the list price. The bank must first approve the amount. If more is owed or the amount is not near what the bank is willing to settle for the sale may never be approved. Always find a real estate agent knowledgeable in short sales who can work with buyers seeking FHA or VA loans. Federal programs require the property to pass inspection and if the buyers are not willing to make repairs themselves the bank that is owed is not likely to do them.

By: Jeremy C. Winters

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