Guest blog by Lisa Birdsong SFR, Keller Williams Realty
A short sale occurs when the homeowner’s lender consents to accept a reduced sum to release a mortgage debt based on a hardship. Should you have questions regarding distressed properties, foreclosures and short sale listings, for sale in Frisco, Prosper, Celina, McKinney, Plano or other Dallas-area communities, contact me to discuss options and procedures. I can provide you with this highly sought after list of distressed properties.
How do I buy a short sale?
- Do your research – choose a professional real estate agent that has experience, training and knowledge of the short sale process. Don’t let inexperience hinder your process. Having the right professional will provide great insight and a higher probability that the transaction will have a successful closing.
- Enlist the services of a knowledgeable local real estate professional to support your research of a property and help you make informed decisions. Your agent can assist in building a strong support team, including real estate attorneys and title officers. Because each lienholder must consent to a short sale, a property with multiple liens, like first and second mortgages, mechanic’s and condominium liens, or homeowners association liens, will be harder to purchase. A title search may cost $250+ but it can help weed out the less desirable properties that might require multiple approvals.
- Know the home’s fair market value. By agreeing to a short sale, lenders are consenting to lose money on the loan they made to the sellers to purchase the home. Their goal is to keep those losses to a minimum. If your offer is dramatically less than the home’s fair market value, it may be rejected. Your agent can help identify the fair market value. The lender will determine whether approval is in its best interest.
- Even with an experienced real estate agent and under the best circumstances, buying a short sale property will generally take longer than a typical real estate transaction. Be aware that a majority of short sales will not close in the customary 30 to 45 days or less. Keep in mind that in a short sale, an acceptance from the seller and lender are required for the discounted price. The lender approval process can take weeks or months, even longer if the lender counteroffers. Expect bigger delays if several lienholders are involved; each can make a counteroffer or reject your offer.
- Home protection warranties, buyer credits and allowances, and closing cost concessions are generally not negotiable when buying a short sale. The lender will be selling the property “as is” which means the lender usually isn’t going to pay for repairs. Most likely you’ll purchase the home ‘as-is’ which means no repairs or credits for repairs. However, you can request an option period, which will allow you the opportunity to perform inspections. If the home is in need of costly repairs, you can always cancel during that period.
Although purchasing a home via short sale may save you money, the process is trying and not a good fit for every buyer, as they take a great deal of patience and flexibility. An experienced, knowledgeable agent can save you both emotional and financial stress. Don’t hesitate to contact me if I can be of assistance.
This article includes general information about tax laws and consequences, but isn’t intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.
Michelle Castle provides mortgage loans to all of North Texas and Southern Oklahoma. Call Michelle Castle at (903) 892-1998 if you are looking for a home loan in North Texas and Southern Oklahoma.