Home buying has changed in so many ways. One of these ways is we now have an abundance of short sale homes and lender owned homes as well as the independent homeowner selling their homes. If You decide that the home you want is a short sale home.
What is a Short Sale?
A short sale is a process the seller is hoping to complete before they lose the home to a foreclosure. This is good for the seller as a short sale is less dramatic for them as it will typically not hit them on their long term credit as much as a foreclosure. A foreclosure means the seller won't be able to buy a home for much longer than a short sale as their credit is hit harder. The seller has started the process with their mortgage company by sending in required paperwork. Now they wait for an offer or several offers.
The Offer
An offer can be written along with the various documents that you acknowledge the property will be sold in "As Is" condition. You will also be informed that the seller may not be making any repairs or be receiving any monies or paying any out of pocket expenses. Most likely the seller will not be disclosing any past repairs or changes made to the property. What does this mean to the buyer? You are probably buying a property for less than the same home would sell for if it was not a short sale so you can expect a bit more out of pocket repairs and a property that is not in "top notch" condition. Some sellers that simply want to make this process as painless as possible and get an offer prior to a foreclosure so they maintain the property beautifully. This is not typical, most sellers are distressed and have vacated the property and have left it a bit in disrepair.
The Wait
The offer gets faxed into the mortgage company along with a copy of the HUD and your proof of financing the property. Most mortgage companies are flooded with so many that waiting to get a response can vary anywhere from just a week or so to several months. Not only are you waiting to hear if they are even going to consider your offer you also may be competing with other offers that are either on the table or come in during the wait process. Sometimes you have no idea that you are not the only offer in or whether or not the mortgage company is prepared to take the lesser amount owed. Be patient, this process is not a sure bet and it can be a long wait. If you absolutely need to be placed in a home within the next month or two you should consider a bank owned or individually owned property.
Acceptance
Assuming your offer has been negotiated and accepted the bank will then give a time-frame in which you MUST close by and the contract will become null and void if not closed by that date. Now is the time for you to do your due diligence and get a home inspection! Do not forego the inspection, you need to know the extent of the condition of the property before the end of the inspection period is over and you are now at risk of losing the earnest deposit if you do not move forward and close on the property.
Suggestion: When working with a lender who will be representing your loan and loan approval...(this is critical to the successful close of the home of your choice)....have all the preliminary buyer approval process out of the way..meaning be pre approved.... through the underwriting approval based on credit, income, etc. So when the negotiating process is taking place with the bank (sellers bank)...they know the process to close successfully is shortened...this can win your offer over even if your competing with higher offers.
Most Important!It is extremely important that you have hired an experienced Real Estate Agent that represents you and only you, not the seller. You need to have your own representation with someone that has knowledge with short sales.
You can say a Short Sale is more then Looking Short, while on your Knees Praying for the process to end:)
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