Issue by 4532: Acquiring a short sale? Is it as terrible as I have noticed?
We are pre-approved for a home loan, have a large reserve and are actively seeking for a residence. The issue we are running into is most properties in our spot are quick revenue. Every thing we have noticed about the brief sale method has been bad. We do not have to transfer out of our present home to get a new one particular, so would a short sale be a excellent choice? What was your experience like?
Ideal remedy:
Solution by Dave
Of course, it is. Stick to REO properties (financial institution-owned) as a substitute of short sales except if you have Lots of patience and do not brain waiting.
What do you believe? Remedy beneath!
{ 3 comments… read them below or add one }
YOU did not indicate why you want to buy; that is critical in any licensee being able to guide you.
short sales are usually only a good deal for those who need to save some money and have
lots of time to wait for banks to stop playing around
available to guide you further
A short sale is a sale where the seller is not able to sell the property for enough money in order to pay off the mortgage and deliver a clear title to the buyer. They have to ask the mortgage lender to help them by forgiving part of the loan (or a few other alternatives- such as turning part of the old mortgage into a personal loan to the seller that they still owe after the sale). The banks have been defrauded by sellers hiding assets that they could have used to pay off the shortage themselves- or by a “fake” sale to a close friend or relative- or dozens of other things.
Mortgage companies have to investigate this very fully and also figure out if it would be better for them to actually foreclose or some other thing. This investigation does take months very often and when they are turned down it does not often have anything to do with the buyer or the contract.
You as a buyer may have spent money of inspections or appraisals or renting a temporary apartment or whatever- only to find that you need to move on to another house. Maybe the interest rate has gone up in the meantime.
The supposed low price may be a false come on. The bank may require the contract price be raised before they will agree to the sale. No one in the transaction will make any needed repairs- so hope that the roof and such are in good shape.
Even if you are an investor that is not planning to move, you still have to hang out and wait- and then move fast once it is approved.
Today we have one that has been pending since March 22nd and we do not have any idea yet if it will be accepted and when it might be accepted. You can set a deadline- but that will not speed things up -it will only allow you to walk away when you want to- and you can do that without a deadline.
Keep in mind, real estate laws vary from state-to-state.
That being said, short sales are not necessarily “negative”. In a traditional sale, you have a buyer and a seller.
In a short sale, there are two decision-makers om the “sellers side”, the seller and the seller’s lender. Once the seller agrees to the terms of the contract presented by the buyer, the seller’s lender must also agree to the terms. This is what takes so long, waiting for the seller’s lender to respond.
Any Realtor worth his or her salt should consider adding a short sale addendum to your contract. This will better protect your interests by putting a maximum time for the seller’s lender to render a decision on the contract. That way you’re not waiting around indefinitely. Again, real estate laws vary from one state to the next. You should consider contacting a local Realtor for advice.