If you thought buying a new home was going to be easy, you’re in for a rude awakening. Five minutes after meeting with a real estate agent, you will start feeling overwhelmed. You won’t believe the number of things you need to think about, and the different kinds of buying opportunities available to you. One of the terms you will hear your real estate agent brandishing will be short sales.
When someone uses the term short sales in connection with a home, it means the current owner has defaulted on their mortgage payments, and the bank is in the process of taking ownership. The problem banks currently face is having more properties than they want to deal with. Banks don’t like having property, they like having money and want to sell the homes as quickly as possible.
The owner always knows when the bank has begun preparations to foreclose on a home. They have months to get ready, and they know exactly how far they’ve fallen behind with their payments. A short sale is something both the bank and home owner think will be best. Not all homes can be sold on a short sale. In order of this specialized selling process to work, the bank has to agree to accept a lower buy off fee. The bank will be losing money on the property. The reason the bank agrees to the sale has to do with the fact that when compared to a true foreclosure, the bank won’t be forced to deal with extra expenses, such as paying property taxes and maintaining the property until it sells. The longer the bank thinks it will take to sell the home after they have foreclosed on it, the more open minded they will be to the idea of short sale. It provides the bank with a way to get the home off of their books.
There will be several things the bank will take into account before agreeing to the deal. Most importantly they will need to consider exactly how much money the stand to lose on the deal. They will compare this amount to the current state of the market, and the length of time they think it will take to sell the house once it they have formally foreclosed.
The advantage to purchasing through short sales will be the reduced price. It will be difficult for you to find a better deal. The other advantage will be a slight decrease in the length of time you can claim ownership of the property, and the amount of paperwork the bank has to go through. The downside to this type of sale will be that the owner isn’t always as ready to move out of the house as they should be, you have a very narrow window of time to make things happen, and sometime the house will need more work than you originally anticipated.
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