What is a “short sale,†exactly, and why are some folks looking to purchase a short sale home? A home that is being sold as a short sale is one where the homeowner is still living in the house but may no longer be making payments to his or her lender. In most cases the lender has begun the foreclosure process. Since the homeowner can no longer afford the home, he or she is trying to sell it and asking the bank to accept a purchase price less than what is owed on the mortgage. Thus we arrive at the term “short sale†because the bank is getting “shorted,†or taking less than what it is due.
If you’re a potential buyer of a short sale, you need to know about the drawbacks involved in purchasing this type of property. The bank and the seller are now working together to get the home sold, which means they need to agree on a price as well as the terms. In essence, you, as the buyer, now have to deal with another chef (the bank) in the kitchen. Since they’re looking for the most amount of money possible, negotiating with bankers can be problematic. You can put in an offer, but they don’t have to get back to you in a timely fashion. In short, contract acceptance deadlines mean nothing to the bank.
And while you’re waiting for an answer on your contract offer, your hands are sort of tied. Will your offer be accepted? How long will you have to wait to find out? Should you keep looking for another home? Let’s say you keep looking and actually find another house you’re interested in pursuing. You’ll need to withdraw your offer on the short sale before the bank says yes and before you make a new offer on the second home.
There’s more, so come back next week when we’ll continue discussing pitfalls to be aware of if you’re contemplating a short sale.
