Buying a Short Sale
Due to the high number of distressed homes presently in Florida, it’s almost unavoidable that home buyers will come across one that merits consideration. In fact, some buyers are targeting short sales for purchase. If this group includes you, it’s important to know what you’re getting in to.
Several Parties to the Transaction
Though the homeowner holds the deed to the property, there are other groups that will get a say in the short sale as well. The lender will not release their lien from the mortgage unless they approve the terms of the sale. There could also be a mortgage insurer who will get a say in the transaction. If the lender uses a mortgage servicer, which almost all the big lenders do, you will also have to go through their short sale approval process! It could be sooner or later, but expect to wait about 60 days before you get short sale approval from all the interested parties.
Short Sales Don’t Sell at a Significant Discount
Many people believe that short sales sell well below the value of similar homes. Before a bank will allow a short sale to proceed, they will get a brokers price opinion or an appraisal done. They’ll then set the price of the home at the appraised price or slightly lower. If the home isn’t selling, the bank will consider offers lower than the asking price. Depending on your source, you may see short sales at 5-10% below market.
When a home sells “As-Is”, the owner or lender is telling the buyer that they are unwilling to address any problems a home might have. There are exceptions, but generally a bank is highly resistant to sinking any more money into a home they will already be taking a loss on.
Buying a short sale is significantly harder than regular, non-distressed sales. If you have a limited amount of time in which to buy or are not a patient person in general, short sales may not be for you.