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I have been hearing about short sales for weeks now..but I am so confused as to what they are..
What is a short sale?
Is it ok to purchase a home through a short sale?
What is the process to purchase a home that way?
How does one qualify?
Just wondering....I'm moving in about 5 months and would love to get a home for cheap as opposed to paying rent...I heard that short sale homes are going for fairly below market prices.
Any info would be appreciated.
Short sale is when the home is sold for less than the owed amount, hence "short"
Yes you can purchase a home through a short sale, it takes much patience and an agent that will keep on top of the lender. The process can be long.
The seller will be working with their bank to get them to agree to price below the amount owed. If there are multiple leins it can be even more complex.
In my area the shorts are not really going below current "market value". They are going below the market value at the time they were purchased or re-financed, which created the upside down situation.
You want to be pre-approved with a lender before submitting an offer and have proof of closing and down payment funds.
Even after everything, the home may still end up in default and get foreclosed on before the sale is completed. Every state has different foreclosure laws, consult the appropriate professionals.
REO's (Real Estate Owned by the lender) may be easier, but still risky, at that point they want a quick close, you need to be pre-approved and have proof of funds. Get a good inspection because a lot of the REO's are flips that flopped.
If you decide to pursue short sales, be ready for frustration and disappointment and be sure to get a buyer's agent who is very familiar with the short sale process. You can get excellent deals that way, but they are not for the impatient or the faint of heart.
In today's environment, everyone wants to buy a home as cheaply as they can...and I think THAT is the real source of the question.
Is a "short sale" the best way to do that? Maybe not. The process is very cumbersome because there are multiple layers of decision makers in the loop and getting a response may take a long time. In some circumstances there is more than one lender with a dog in the fight...even harder! It also stands to reason then that the bank wants to get as close to the market price as they can. Colfax is RIGHT on in this regard!
One other avenue worth pursuing is to find sellers BEFORE they are in the short sale situation...while they still have some equity in the deal but who are at risk for foreclosure and have to move. You may be able to find someone that you can help by giving them enough to pay off their lenders and pocket some too.
All of this presupposes one very important thing though...that the house itself is not important to you. If you are only in search of "the deal" and you don't care about the house (where it is, the condition of it, etc...) then either of these might be ways for you to go. However, MOST buyers are more interested in the house FIRST...and the goal is to get the best deal on that PARTICULAR home. This requires a completely different strategy for searching, and negotiating than looking for the elusive "short sale."
In today's environment, everyone wants to buy a home as cheaply as they can...and I think THAT is the real source of the question.
Is a "short sale" the best way to do that? Maybe not. The process is very cumbersome because there are multiple layers of decision makers in the loop and getting a response may take a long time. In some circumstances there is more than one lender with a dog in the fight...even harder! It also stands to reason then that the bank wants to get as close to the market price as they can. Colfax is RIGHT on in this regard!
One other avenue worth pursuing is to find sellers BEFORE they are in the short sale situation...while they still have some equity in the deal but who are at risk for foreclosure and have to move. You may be able to find someone that you can help by giving them enough to pay off their lenders and pocket some too.
All of this presupposes one very important thing though...that the house itself is not important to you. If you are only in search of "the deal" and you don't care about the house (where it is, the condition of it, etc...) then either of these might be ways for you to go. However, MOST buyers are more interested in the house FIRST...and the goal is to get the best deal on that PARTICULAR home. This requires a completely different strategy for searching, and negotiating than looking for the elusive "short sale."
Good luck.
I understand what your point is and agree but in my area most people who are in financial trouble owe way more than the value of their home. So the owners won't be able to walk away with a dime they just get rid of the mortgage(s).
Also, a bank cannot accept a short sale unless the owner has proven financial hardship such as, loss of job, sickness, pay decrease etc. 95% of the lenders will not look at the seller's file until there is an offer in place. Meanwhile, late fees and penalties are accruing because the seller cannot make those payments. I have a couple of offers waiting for approval from the banks: One since mid November and one from January. So, you will need a lot of patience and time on your end.
One more thing, if the property has 2 liens, you would have to get approval on both lien holders... double the headache and it better be worth it.
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