Short Sales
A short sale is a relatively new term to the real estate business, created by the current market conditions. A short sale is where the Seller of the property owes more on the property than the Listing Price of the property. For a buyer, there are several ramifications that should be understood.First and foremost, with a short sale, the buying process will be quite different than with any other sale. After the negotiation phase where the seller agrees to a price, the offer is submitted to the Seller's Lender for their approval. This approval takes anywhere from 6 weeks to many months. And there is no guarantee that the lender will approve the sale. Frequently the lender comes back with a counter-offer asking for a higher price. Many times, they ask the Seller to sign a note promising to pay them part of the difference between the sales price and what is owed.
Given the expected duration of a short sale, it's important that Buyers not have a fixed move date where they must be in a home by a certain date. Only VERY patient Buyers with LOTS of flexibility should consider making an offer on a short sale property.
There are lots of little details about short sales, like assuring that you have the right clauses in the contract to protect the buyer. I also recommend not putting down an escrow deposit until after the lender approves the contract. A short sale is a complex deal, and should not be undertaken without guidance from a professional with short sale experience.
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